The Small and Medium Enterprises Association of Malaysia (SAMENTA) has urged the Human Resources Ministry to focus on reforming the country’s labour laws to keep up with the gig economy and the reality of a post-pandemic world.

Association chairman Datuk William Ng said that while the association does not oppose any reasonable increment in the minimum wage, they urge the Government to align any such increment to the growth in gross domestic product (GDP) and labour productivity.

According to news reports, Malaysia’s labour productivity declined by 5.6% in the third quarter of 2021.

On Friday (Feb 4) Human Resources Minister Datuk Seri M. Saravanan said that a minimum wage of “around RM1,500 a month” is expected to be implemented before the end of this year.

However, he added that while the new minimum wage needed to be resolved as soon as possible, the new rate had not been finalised as his ministry was still awaiting Cabinet approval.

On the topic, Ng further pointed out that the way forward for Malaysia and the country’s workforce was to link income to productivity.

“The Productivity-Linked Wage System (PLWS), which counts the Human Resources Ministry as among its champions, is seeing a lot of interests among businesses including small and medium enterprises (SMEs).

“However, our labour laws, including the Employment Act 1955, are still time-based, meaning that any attempt at implementing PLWS would have to be on top of a time-based monthly salary, and not instead of it.”

According to Ng, it is common for employees to be paid based on output in more developed countries like Australia.

“Housekeepers in hotels, for example, are paid for rooms cleaned rather than the hours worked. When occupancy is high, the employees make substantially more and hence gaining a larger share in the business prosperity.”

Ng said that this model has worked quite successfully in the ride-hailing industry locally with riders being paid primarily by jobs completed rather than by the hours worked.

“The interests of both businesses and working Malaysians are best served when income is tied to productivity rather than a minimum wage premised upon workers working a fixed number of hours,” he remarked.

The minimum wage was last increased in February 2020 from RM1,100 to RM1,200 per month.

 

 

 

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