In conjunction with his Labour Day address on 1 May 2021, the Prime Minister of Malaysia, Tan Sri Muhyiddin Yassin, announced that a review of the Minimum Wages Order 2020 ("the 2020 Order") is being conducted.1 The Prime Minister also called upon all stakeholders to give their proposals.
No deadline has been announced for the submission of proposals, nor has any indication been given as to when a new minimum wage may take effect.
The 2020 Order, which came into operation on 1 February 2020, introduced a two-tiered minimum wage based on the place of employment of an employee.
For an employee whose place of employment is in any of the 16 City Council areas or the 40 Municipal Council areas specified in the Schedule to the 2020 Order, the minimum wage rates are as follows-
For an employee whose place of employment in Malaysia is in any area other than the City Council areas or Municipal Council areas specified in the Schedule to the 2020 Order, the minimum wage rates are as follows -
Comments
As the economy of the country is still recovering from the economic downturn caused by the outbreak of the Covid-19 pandemic, and many employers are also having to incur significant expenses to upgrade workers' accommodation to comply with the Employees' Minimum Standards of Housing, Accommodations and Amenities Act 1990, it is likely that employers and their trade associations will voice concern on the wisdom of implementing a wage hike at this juncture.
Conversely, an increase in the minimum wage would be a populist move that will be welcomed by employees at the lower end of the wage spectrum, who are undoubtedly also affected by the economic downturn.
In coming to a decision on whether to increase the minimum wage, the Government will have to tread the fine line between implementing a populist move and avoiding measures that could affect the viability of businesses that are already struggling to survive the downturn.
Our summary of the 2020 Order is available here.
Footnote
1 Minimum wage being reviewed, The Star, 2 May 2021.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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