Sunway University Business School economics professor Dr Yeah Kim Leng, told The Edge that he believes any increase in the minimum wage would be good for the economy.
“Businesses are likely to be able to absorb the rising costs. The economy is expanding, we are in high position to absorb higher wages,” Yeah was quoted as saying.
He added that a hike in minimum wages paid to workers in low-skilled jobs would also give rise to ripple effects in the labour market, as other employers may face the pressure to offer higher pay.
On Oct 12, Human Resources Minister Richard Riot was reported to have said that the new minimum wage to be announced next year would focus on closing the gap between the rate in Peninsular Malaysia and Sabah/Sarawak.
In July 2016, the government had raised the minimum wage from RM900 to RM1,000, in Peninsular Malaysia, and from RM820 to RM920 in Sabah and Sarawak.
Riot also said that the Minimum Wage Order must be reviewed every two years.
Institute of Democracy and Economic Affairs chief executive officer Wan Saiful Wan Jan, does not believe that raising the minimum wage would have much of an impact on the inflation rate.
“The bigger worry should be the higher cost of doing business created by a hike in minimum wage because this may deter investment and have a negative impact on growth,” Wan Saiful was quoted as saying by the financial daily.
However, he warned that there could be some long-term implication on unemployment rate, which he said would not be good for those in the lower-income group.
“Minimum wage is politically popular but has its pros and cons. While some people may benefit, others may lose their jobs as employers mechanise to reduce costs due to a higher minimum wage.
“So, we must have a balance in looking at this policy. It is not all good,” Wan Saiful told The Edge.
“A hike will add to the costs of doing business, which may mean more people in the lowest strata losing their jobs.”
Wan Saiful added that an increase in wages should come only after there is an increase in the productivity level.
Meanwhile, an economist with United Overseas Bank (M) Bhd said a minimum wage increase would create a more inclusive economy.
“If you look at it, this will help the lowest income group of people, which is important given how the rising cost of living has affected these lower income earners more,” Julia Goh told The Edge.
She added that with foreigners being a large part of the the minimum wage-earning workers in Malaysia, such an increase could possibly spur Malaysians to take on more of these jobs, and thereby help reduce unemployment in the country.