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Tuesday, February 05, 2013

NOT TRUE "under the minimum wage policy, the company has to pay an additional RM753,130 to foreign workers and RM483,990 to local employers."

NOT TRUE  "under the minimum wage policy, the company has to pay an additional RM753,130 to foreign workers and RM483,990 to local employers.". The key word is 'additional' - so you do not add in what extra you are paying for your migrant workers now....

"According to an imitative financial statement calculated by the Malacca Chinese Chamber of Commerce and Industry, if a small and medium-sized enterprise (SME) has 100 local employees and 100 foreign workers, under the minimum wage policy, the company has to pay an additional RM753,130 to foreign workers and RM483,990 to local employers. In other words, a foreign worker earns RM1,853 per month, including basic salary and overtime allowances, which is higher than the RM1,515 monthly salary of local employee. In view of this, the minimum wage policy is going to benefit foreign workers instead of local employees, while increasing the expenses of employers. It seems like the policy is good for nothing." - Malaysian Insider, 31/1/2013, Are foreign workers the beneficiaries of minimum wage policy? — Lim Sue Goan

"...a foreign worker earns RM1,853 per month, including basic salary and overtime allowances, which is higher than the RM1,515 monthly salary of local employee..."

This makes no sense at all - for any worker, earning a basic salary of RM900 will be able to work overtime, and the rate is the same for both migrant or local worker, so how can this 'Malacca Chinese Chamber of Commerce and Industry' say that the foreign worker will earn more... they will earn the same. 

Remember, that the maximum number of hours that a worker is to work, and that is including overtime, is 48 hours a week. [I wonder whether the salary + overtime being paid to migrants are higher because they are making these migrant workers work more than 48 hours a week, on week-ends, public holidays, etc.... Maybe the Human Resource Minister or Department must really look at the state of affairs in Malacca with SMEs]

"...(SME) has 100 local employees and 100 foreign workers, under the minimum wage policy, the company has to pay an additional RM753,130 to foreign workers and RM483,990 to local employers...." 

This again makes no sense - why the additional payment for foreign workers... compared to local workers. Have you been paying your migrant worker so much lower than a local worker for the same work, and if this so, then  that employer is breaking the law that is clear that there should be NO discrimination of worker - no discrimination between migrant and local worker as far as wages, working condition, etc are concerned - so where is this extra expenditure coming from. This is in no way 'additional' expense - you cannot include cost of levy and other already now incurred cost for bring in migrant workers --- hello, this is not 'additional cost.

In fact, additional cost will come when it comes to LOCAL workers - Why? An increased wage, means a higher KWSP/EPF contribution by employers, and maybe also a higher SOCSO/PERKESO contribution - not applicable to Migrant Workers... Migrant workers do not have KWSP?EPF and their social security scheme is under the Workmen Compensation Act, where I do not believe increasing salary to minimum wage will increase employer's obligation at all.

Thus, additional cost for now paying the MINIMUM Wage will be with regard LOCAL workers not migrant workers...

SHAME on you employers who were paying your workers less that a poverty line income....

REMEMBER that is is the government that makes it 'more expensive' or 'tougher' to employ migrant workers compared to local workers. 

REMEMBER also that it is cheaper if you directly employ workers - and if you use workers supplied by some 'contractor for labour', you are paying additional fees/profit for the said contractor - it is not workers that get the benefit of your additional payments...

Nowadays, thanks to our Malaysian government of trying to get employers to get workers through outsourcing agents (or contractor for labour), who really now is the one responsible for paying their migrant workers minimum wages... so, really is this new cabinet decision to help SMEs or really that select class, privileged enough to have the required permits/license to be 'contractors for labour'?



I welcome the author,  Lim Sue Goan to respond - and correct me, if I am wrong.

2 comments:

Hattori Hanzo said...

I think it does make sense that a SMI which employs 100 foreign worker have to fork out additional RM700,000 - RM 850,000.00. Previously the rate was RM22.00 per day (8am - 5pm) and subsequently increase a bit since few years back. For the foreign worker,
1. old wages (maximum) are :- (((RM22/8)*12.5 hour per day) * 34 days <26 days basic plus 4 double pay>)- RM1168 per month.
2. New wages (maximum) are :-
(((RM4.33*12.5 hour per day <11 hours exclude lunch>)*34) = RM1840.25
3. Therefore the difference are :
RM 1840.25 - RM 1168 = RM672.25 per worker
4. Therefore 100 workers =
RM672,25.00 additional wages per Month.
5. Therefore RM806,700.00 additional wages per year

I am not sure about the local worker as their salaries are varies according to location and types of work.

Now Mr Hector, before you use the Ministry of Manpower to enforce the 48 hours maximum work hours per week. I can told you this. I am sure all employer are glad to pay for basic wages (Subjective to have enough worker). No employer would want to pay extra 1.5 times or double for the worker.
However if the workers (foreign or local) have basic take home pay of RM900 per month, I am sure they would not want to work here. I am sure with the implementation of the increased wages, we will have domino effect where
1. price of goods will increase substantially to cover the wages.
2. Majority of SMI will decrease jobs but increases productivity.
3. Majority of SMI will not make any hiring this year as the wages are too high.
4. Most SMI will move to other country or simply close shop.

Hattori Hanzo said...

I think it does make sense that a SMI which employs 100 foreign worker have to fork out additional RM700,000 - RM 850,000.00. Previously the rate was RM22.00 per day (8am - 5pm) and subsequently increase a bit since few years back. For the foreign worker,
1. old wages (maximum) are :- (((RM22/8)*12.5 hour per day) * 34 days <26 days basic plus 4 double pay>)- RM1168 per month.
2. New wages (maximum) are :-
(((RM4.33*12.5 hour per day <11 hours exclude lunch>)*34) = RM1840.25
3. Therefore the difference are :
RM 1840.25 - RM 1168 = RM672.25 per worker
4. Therefore 100 workers =
RM672,25.00 additional wages per Month.
5. Therefore RM806,700.00 additional wages per year

I am not sure about the local worker as their salaries are varies according to location and types of work.

Now Mr Hector, before you use the Ministry of Manpower to enforce the 48 hours maximum work hours per week. I can told you this. I am sure all employer are glad to pay for basic wages (Subjective to have enough worker). No employer would want to pay extra 1.5 times or double for the worker.
However if the workers (foreign or local) have basic take home pay of RM900 per month, I am sure they would not want to work here. I am sure with the implementation of the increased wages, we will have domino effect where
1. price of goods will increase substantially to cover the wages.
2. Majority of SMI will decrease jobs but increases productivity.
3. Majority of SMI will not make any hiring this year as the wages are too high.
4. Most SMI will move to other country or simply close shop.