Small and Medium Enterprises Association of Malaysia (SAMENTA) has urged the Minister of Human Resources to focus on reforming Malaysian labour laws to keep up with the gig economy and the reality of a post-pandemic world.

The Minister has recently said that the minimum wage would be increased to ‘around RM 1,500’ by end of 2022. “While we do not oppose any reasonable increment in the minimum wage, we urge the government to align any such increment to the growth in GDP and labour productivity. Malaysia’s labour productivity declined by 5.6 percent in the third quarter of 2021,” said SAMENTA Central chairman Datuk William Ng.

Datuk William Ng

The way forward for Malaysia and its workforce is to link income to productivity. The Productivity-Linked Wage System or PLWS, which counts the Ministry of Human Resources as among its champions, is seeing a lot of interests among businesses, including SMEs.

However, Ng noted that Malaysia’s labour laws, including the Employment Act 1955, are still time-based, meaning that any attempt at implementing PLWS would have to be on top of a time-based monthly salary, and not instead of it.

In more developed countries, such as Australia, it is common for employees to be paid based on output. Housekeepers in hotels, for example, are paid for rooms cleaned rather than hours worked. When occupancy is high, the employees make substantially more and hence gaining a larger share in the business prosperity. This model has worked quite successfully in the ride hailing industry locally, with riders being paid primarily by jobs completed rather than by hours worked.

“The interests of both businesses and working Malaysians are best served when income is tied to productivity, rather than a minimum wage premised upon workers working a fixed number of hours,” Ng said.


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