Fewer jobs, higher prices likely with wage floor, survey shows

KUALA LUMPUR, June 6 — With minimum wage enforced, employers may hire less or increase the prices of goods and services, according to a recent survey conducted by major local recruitment agency Jobstreet.
The federal government announced the first ever minimum wage policy for the country last month, setting a floor of RM900 for peninsular Malaysia and RM800 for Sabah and Sarawak, which it said will be enforced within the next six months to a year.
Southeast Asia’s top online job search firm said 44 per cent of 1,520 employers it surveyed last month said they disagreed with Putrajaya’s move, edging out the 33 per cent who agreed. The remaining 23 per cent wanted the status quo kept.
“When asked if their company will hire less, lay-off or retrench its workers, it appeared to be a split decision. Forty-three per cent said they may do so while another 42 per cent said they would not,” Jobstreet said in a media statement today.
“Employers also felt the pressure to increase pay for the higher-level skilled workers as 65 per cent believed that their employees would demand for a pay rise as well,” it pointed out.
It noted that the majority, 78 per cent, believed that their companies are already paying a fair wage to the lower income group.
Citing employers, Jobstreet said 47 per cent said they predicted their companies would be forced to pass on the cost of hiking up wages to consumers — nearly twice the number of employers, 26 per cent, who said they would not raise prices.
The recruitment firm noted that the remaining 27 per cent were unsure of the decision.
Jobstreet said over a third of employers polled, 35 per cent, said the wage floor should be kept below RM900, compared to 27 per cent who felt that RM900 – RM1,100 is ideal and 15 per cent who found RM1,100 and above agreeable.
Concerns about the effects of the minimum wage also come at a time when the country is poised to be hit by the ripples from its main trading partners and the global economy at large.
Analysts have warned Malaysia to brace for a significant slowdown here due to rising linkages with top trade partners including China, the world’s second-largest market, which economists say is headed for a sixth consecutive quarterly drop in growth with worse to come.
A Greek exit from the euro zone, which is  growing threat, would cause a second recession in as little as four years in Malaysia as the knock-on damage to Europe poses a threat to the global economy, Bloomberg reported analysts and economists previously said.
The World Bank also urged Malaysia last week to expedite reforms such as subsidy cuts and broadening the tax base, key initiatives that have stalled ahead of an impending federal election, if it wants to achieve Putrajaya’s target of being a high-income economy by 2020.
Malaysia reported a 4.7 per cent GDP growth for the first three months of the year, a third consecutive quarterly drop since it posted a 7.2 per cent increase in Q2 2011.