Enforcement of minimum wage policy in Malaysia, preliminary findings on the sentiments of micro, small and medium enterprises

After storming through decades of debate, on the eve of Labour Day 2012, the Prime
Minister of Malaysia announced the floor wage of RM900 (equivalent to USD300)
and RM800 (equivalent to USD267) per month for Peninsular and East Malaysia
respectively. Many employees, especially unskilled workers who live below the
poverty line (earning less than USD250 per month) were overjoyed. However, such
move has also invited concerns from various parties and even outraged small and
medium enterprises (SMEs) which for see the increase in operational costs,
unemployment and even possible close-downs. This paper seeks to gather the
opinions from micro, small and medium enterprises in Malaysia over the new wage
policy and determine if the decided rate is acceptable, and most significantly, will
these SMEs comply starting 2013? Two sessions of focus group discussion involving
20 entrepreneurs were conducted. Although majority of the entrepreneurs agree that
such intervention helps to alleviate poverty, many voiced concerns over detrimental
effects in the long run which include rise in local unemployment, heavy reliance on
foreign workers, hike in inflation rate, increase in operating and labour costs, and
even issues of differential in minimum wage between Peninsular and East Malaysia,
whereby the latter reports higher costs of living. Many countries have practiced
minimum wage policy - some single minimum wage and others multiple, vary
according to location, industry and sector and even performance-based. By collecting
opinions from SMEs, this research aims to propose a win-win and feasible model of
minimum wage enforcement that benefits both SMEs and workers at large. The
findings from this research which structure the views and feedback accordingly by
region, state, industry and sectors will be useful not only to all SMEs but also to the
National Wage Consultative Council and the Ministry of Human Resources.