KUCHING: The Associated Chinese Chambers of Commerce and Industry of Sarawak (ACCCIS) has described calls for a higher minimum wage in East Malaysia as ‘futuristic’ and unrealistic given the current economic challenges faced by businesses.
Its secretary-general Datuk Jonathan Chai said while employers acknowledge the importance of workers’ welfare, any significant wage increase must be approached pragmatically to avoid unintended consequences.
“Most employers do look after their employees’ welfare. We want them to be able to attend to their basic necessities without struggle. However, we must also be realistic.
“A drastic increase in operational costs due to a wage hike could potentially kill businesses, leading to job losses and social issues,” he told Sarawak Tribune.
He was reacting to Sarawak Bank Employees Union CEO Andrew Lo’s recent call for the minimum wage in Sarawak and Sabah to be raised to RM2,125, a 25 per cent increase from the newly revised RM1,700 rate, to reflect the higher cost of living in the region.
Chai acknowledged that logistical challenges, the vast geographical landscape, and high transportation costs do contribute to an increased cost of living in Sabah and Sarawak.
However, he stressed that the responsibility to address these challenges should not fall solely on employers.
“It would be grossly unfair, too simplistic, and impractical to expect employers to shoulder the entire burden. A holistic approach involving the government and all stakeholders is needed to find sustainable solutions,” he said.
While recognising that a higher minimum wage could help workers in Sarawak and Sabah cope with living costs and boost economic activity, Chai stated that small and medium enterprises (SMEs) in particular may struggle to absorb the additional labour costs.
Apart from higher operating costs, he pointed out that higher wages could lead to increased prices for goods and services as businesses pass on the additional labour costs to consumers, potentially offsetting the benefits of the wage increase.
“Some businesses, particularly those in labour-intensive industries, may resort to automation or downsizing to manage higher labour costs, leading to job losses.
“While raising the minimum wage in East Malaysia is a commendable proposal to address the higher cost of living, it must be implemented with careful consideration of its economic and social impacts.
“A phased approach, coupled with support for SMEs and targeted subsidies, could help mitigate the potential downsides.
“Additionally, the government should work closely with extensive consultation with stakeholders, including chambers of commerce, business federations, and unions to ensure a balanced and sustainable implementation,” he said.
