We applaud the government’s initiative to assist the B40 group with the latest announcement of the implementation of RM 1,500 minimum wage, since its last revision in February 2020 from RM 1,100 to RM 1,200. The policy will come into effect on 1st May 2022 for large and government-linked companies.

As the standard of living is increasing, particularly for those living in the city, increasing the minimum wage would tangibly have its benefit for employees and employers alike.

For employees, a more generous minimum wage would mean an improved standard of living particularly the additional income that would assist to ease the payment of bills and afford better basic living necessities. At the economy-wide level, some of the money would flow back into other businesses for necessities such as rent, food and clothes.

Minimum wage also serves as an incentive for employees to work harder and stay longer with their employer, wherein they could benefit from advancement within the company for a better and more stable future.

As for the employer, improving employee morale would mean an increase in workforce retention thereby reducing hiring and training costs. This would also lead to a more productive workforce with higher quality production and customer satisfaction, as employees are less distracted by monetary needs, and can focus more on work. One case in point is German manufacturers paying higher wages in comparison to U.S manufacturers while competing with the Chinese manufacturers. Germany’s higher pay turns out to be an advantage as it attracts more skilled workers, reducing the talent gap while increasing productivity. Higher pay thus elicits greater commitment and productivity from employees, hence the more competitive the organization will be. Click here to read more.