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

The Malaysian Employers Federation (MEF) hopes the government will postpone the Minimum Wage Order 2016 (MWO 2016) slated for July 1.

Its executive director, Datuk Shamsuddin Bardan said about 30,000 employees, especially at lower level, may be retrenched if MWO 2016 was enforced.

"Employers have to bear high cost if MWO 2016 is enforced and will retrench workers before July to reduce operating cost and retrenchment benefits," he told Bernama, here today.

MEF expects 60,000 workers will be retrenched this year if MWO 2016 was enforced on July 1, allowing for the minimum wage to be raised to RM1,000 for workers in Peninsular Malaysia and RM920 for those in Sabah, Sarawak and Labuan.

READ: Minimum Wages Order 2016 to take effect July 1

Shamsuddin said the workers to be retrenched come from sectors such as oil and gas, banking and finance, insurance and retail.

"Hypermarkets have seen a big drop in turnover and some of them may have retrenched their workers via voluntary retrenchment.

"This situation is worrying and the government should help local companies to survive during difficult times and to retain employees."

He said last year, many large companies recorded a decline of 30 to 40 per cent in turnover and resulted in some 38,000 workers being retrenched.

Meanwhile, Malaysian Trades Union Congress (MTUC) secretary-general N. Gopal Kishnam was confident MWO 2016 would not burden employers as the salary increase was not that high.

"The probability of retrenchment or even closure of business because of rising labour costs is small. Employers have to resort to such action only when the economic situation really deteriorated," he told Bernama today.

Gopal said the increase in minimum wage was a bonus to the Malaysian workers who are facing an uncertain global economic situation.

"In addition to help reduce the burden borne by them, MTUC hopes the salary increase will encourage the workers to be more productive," he added.