Here is an update on Malaysia’s minimum wage and extension of requirement wage

Saturday November 24, 2012
Employees at 55 have the nation-building skills and knowledge


IT was meant to be a done deal, but the implementation of the minimum wage and the retirement age for the private sector have been subject to a series of intense lobbying by employer groups.

The implementation of the minimum wage, which is set at RM900 for Peninsular Malaysia and RM800 for Sabah and Sarawak, is more likely to become reality now that companies have reached a compromise with the National Wages Consultative Council.

Although it has been reported that 4,500 companies have asked for a delay in the implementation of the minimum wage, this is a relatively small percentage of the 650,000 active companies in thecountry.

One area of contention, even if the implementation proceeds, will be on how basic wage is defined.

We have heard stories about how wages are being restructured whereby commissions in the past are now being factored into the basic wage for employees.

And what about the date of implementation of the retirement age to 60 years of age?

There are many employees who are on the cusp of crossing the old “retirement age” norm of 55 years of age who are going be caught in a limbo, depending on when the law comes into effect.

Previously, this group of people would have gotten used to the fact that they would officially retire at 55.

For those still productive, they know that the chances are high that they would be able to continue employment with their current companies on contract. But once the Minimum Retirement Age Bill 2012 was gazetted in August, expectations were high among this group that the contract option no longer would be needed, for another five years at least.

These employees, who at 55, possess the skills and knowledge that are increasingly essential as the country progresses towards a high-income nation. They are the ones who have been wondering when the new law will take effect.

Employers have asked for a five-year delay in putting into force the new retirement age of 60, but it appears they have agreed to reduce it to one year.

A decision will most likely be made next month and it will be interesting to see if the employers will have their way or if the Human Resource Ministry will stand firm.

Delaying the date of implementation actually makes little sense at the moment. The law, after all, has been passed and when compared with other countries in the region, Malaysia has a pitiful retirement age.

Considering the productivity of our workers and the per capita income of Malaysians, which are in reality only second behind Singaporeans, there is little reason to think the economy cannot handle it.

Unemployment is low and really, those who want work can easily find a job, given the number of foreign workers in the country.

Companies which choose to retire off an employee will still have to promote somebody else to fill that position at basically the same pay.

In essence, retiring off people with the skills and knowledge at 55 makes no sense given the country’s ambition of becoming a high-income nation. All high income nations have a much higher retirement age than Malaysia and it’s about time we join their ranks.

Acting business features editor Jagdev Singh Sidhu thinks the economic benefits of lengthening the tenure of employment will be telling.

Source: The Star

Posted by:

In Tune specialises in finance and accounting outsourcing, human resource (HR) outsourcing to SME business owners in Malaysia; that traditionally cannot afford professional services which they now can at a fraction of the cost less the headache; so that they have more time to focus on the business operations that matters to them.

Why hire an executive when you can now get at least one qualified professional with an executive at less than an executive pay?

Tags: , , , ,

No comments yet.

Leave your comment