MEF: Government should lower GST, not increase minimum wage

The government should look into other aspects, such as reducing the Goods and Services Tax (GST) rate, in an effort to ease the burden of the rakyat.

Malaysian Employers Association (MEF) executive director Datuk Shamsuddin Bardan said the government's target to increase the minimum wage, which is to alleviate the burden of the people, may not be achieved.

This is because such a move would ultimately lead to more job losses.

"Some parties claimed that the rate of 6 per cent are burdensome for the rakyat, perhaps the government could consider reducing the rate," he said.

"If the employer had to do layoffs, there will be more social problems, people are better off when they have jobs rather than lose them," he added.

MEF had previously expected that the increased operating costs from the minimum wage increase would force local employers to retrench up to 60,000 workers this year.

READ: 30,000 workers may be retrenched if MWO 2016 is enforced in July - MEF

READ: Minimum Wages Order 2016 to take effect July 1

He said the majority of retrenchments are expected to occur in the oil and gas sector, banking and finance, as well as insurance and retailing.

He added that the MEF is also concerned that lower level employees will be the main victim of retrenchments this year.

This is because 70 to 80 percent of the 38,000 workers retrenched last year were from the upper and middle levels.

Shamsuddin also remained pessimistic when asked about the job prospects of the country.

"We expect the unemployment rate will rise, firstly due to all the retrenchments.

"Second, folks coming out of higher education institutions or SPM graduates, their opportunities to find work are also quite limited now," he said.

MEF has urged the government to increase efforts to help companies weather the current challenging economic period and retain their employees.

Minimum Wage Order 2016 requires employers in Peninsular Malaysia to increase the salaries of their employees from RM900 to RM1,000, while employers in Sabah and Sarawak are required to increase the salaries of workers from RM800 to RM920.