The Malaysian government has implemented proactive measures by increasing the minimum wage for private sector workers from RM1,500 to RM1,700, effective last February.
The initiative aims to improve the living standards of the people, especially the B40 group who are affected by the increase in the cost of living.
However, the wage increase has sparked concerns about inflationary pressures and its impact on small and medium enterprises (SMEs).
According to Chief Economist and Social Finance Expert, Dr. Mohd Afzanizam Abdul Rashid, the implementation of the minimum wage plays a role in overcoming labor market inefficiencies and reducing the risk of low wages.
Afzanizam informed that employers are concerned because they consider the wage increase as an additional cost to employees.
Afzanizam stressed that the implementation of the minimum wage is only an instrument in addressing labor market inefficiencies.
Following the improvement in the financial performance of companies, it allows employers to provide higher remuneration to employees.
He also emphasized the role of trade unions in safeguarding the rights of workers in voicing their rights and concerns regarding work organizations.
In conclusion, progressive wage strengthening policies are able to strengthen consumer spending and contribute to sustainable economic growth.
