Govt does not rule out inflation risks following enforcement of minimum wage - Rafizi

PUTRAJAYA: The government does not rule out the possibility that the enforcement of the RM1,500 minimum wage for employers with fewer than five workers, which began on July 1, will have an impact on the country's inflation rate, said Minister of Economy Rafizi Ramli.

Speaking to reporters at the ministry today, Rafizi said the government had carried out the necessary assessment on the matter before deciding to enforce it.

"The enforcement of minimum wage order comes with a risk (of inflation) but we (the government) always make sure that the increase in the wage rate can help balance the salary and the cost of living of the workers. That's our focus.

"The nature of the economy is such that there is always inflation. In fact, we hope to keep inflation at a healthy level of around two per cent," he said.

The minimum wage order for the entire country was gazetted on April 27, 2022, for implementation from May 1, 2022, while the enforcement of the RM1,500 minimum wage for employers with fewer than five workers, took effect on July 1 this year.

Rafizi said the country's inflation rate in May 2023 continued to decline to 2.8 per cent compared to 3.3 per cent in April 2023, marking a nine-month consecutive decrease.

"What's important is that inflation can be absorbed by a wage increase that is commensurate with the value of work and the increase in the prices of goods," he said.

Rafizi said the enforcement of the minimum wage order could also ensure that people's income increased periodically in line with the rising cost of living.

-- BERNAMA