PETALING JAYA | The majority of those who will benefit from the increase in the minimum wage to RM1,200 per month are foreigners, according to Malaysian Employers Federation (MEF) president Tan Sri Azman Shah Haron.

They make up 95% of the beneficiaries but the burden of such an increase will be borne by the locals,” he said.

Azman Shah told a press conference that the increase will result in higher prices of goods and services.

The increase would also have an effect on the economy as foreign workers would be remitting more money back to their home countries.

He said a Bank Negara Malaysia report showed that when the minimum wage was raised to RM1,050 a month in 2017, remittances by foreign workers out of the country rose to RM34 billion from RM18 billion previously.

“And this is only from legal workers. If we include illegal workers, the sum can easily touch RM60 billion.”

Azman Shah said the government should consider offering subsidy payments to help the poor cope with the rising cost of living to stem the flow of money out of the country.

He said a study by a local company found that when the minimum wage rose to RM1,050 from RM950, the cost in statutory contributions went up by 30% to 35%.

He also urged the government to change the definition of minimum wage from basic to gross wage to boost productivity.

He said widening the scope of coverage under the Employment Act from RM2,000 to RM4,000 would have an impact on the cost of doing business, particularly in terms of overtime benefits.

“By extending the scope, employers will have to fork out another RM33.85 billion.”

He suggested that only those earning below RM2,000 a month be entitled to overtime.

On the extension of maternity leave from 60 to 90 days, Azman Shah said the government should equally bear the rise in costs to employers.

“It would not be fair to push the entire costs of maternity leave to employers, who will also have to bear the costs of securing a temporary employee.”

Azman Shah said small and medium enterprises would be the hardest hit, given that they comprise 98% of all employers.

He said 60% of them were micro-employers, who hire less than five workers.

“If two of their employees go on maternity leave, what would happen to the company?”