The members of the Malaysian Consortium of Mid-Tier Companies (MCMTC) are NOT in favour of the recent request by the UNI-MLC to raise the Employers’ contribution to the Employment Provident Fund (EPF) for those earning below RM4,000, from present 13% to 20%. The rationale was supposedly to boost the employee’s retirement funds.
Although it may seem that the Malaysian economy is beginning to show some signs of recovery from the global crisis, the overall global outlook is still highly uncertain.
Despite the good work done by the Government ministries in promoting trade and investments to grow the economy, the costs of operating a business in Malaysia has increased substantially since January 2023; firstly, from higher energy costs (a massive 440% increase in the Imbalance Cost Pass-Through (ICPT) from 3.7 sen to 20 sen for the medium and high voltage users) and secondly, steep hike in labour costs as a result of:
- an increase in minimum wages from RM1,200 to RM1,500 (25% increase) which has snowball effects on overtime costs as well as EPF contributions, and
- the extension in the ceiling for overtime eligibility to include those earning below RM4,000 (up from previous RM2,000).
Besides making it more difficult for the Employers and the companies to stay afloat, this demand for an additional 7% increase in EPF contribution to the Employees’ Provident Fund will be detrimental to the Company and ultimately to the Economy.
More than 90% of companies in Malaysia are SMEs and MSMEs, and the bulk of them have yet to recover from the Pandemic. We are still in the recovery stage. With any drastic increase in operating costs, more companies would be forced to increase prices (making things more expensive), decrease headcount, downsize or in the worst-case fold, when the business is not sustainable anymore. Those who have managed to survive, will push ahead with automation, which will be more cost efficient without the added personnel issues.
Employers are Rakyat too. We recognise the importance of our employees and their contributions to our businesses. We would also want to secure their livelihood, firstly by ensuring that our businesses remain viable and secondly, upskilling our employees so that they can continue to add value to businesses and grow those businesses and our Nation together. Knee-jerk reactions with drastic cost increases are not helpful, either for the immediate present or the future.
