The plastics industry could retrench more than 20 percent of its workforce if there is a “sudden and substantial” increase in their minimum wage, resulting in companies being unable to cope with the increased cost.

 

The retrenchment would involve 10,000-20,000 workers out of 86,000 now employed in the industry; with about 400 small companies ceasing operations.

NONE Malaysian Plastics Manufacturers Association president Lim Kok Boon ( right ) revealed these projections today at a joint press conference of 13 industry associations. He said they were examples of what the plastics manufacturers may face if a minimum wage bill is introduced.

Although the example is for the plastics industry, he said that other industries would be facing a similar predicament.

Among the industry groups represented were the Small and Medium Industries Association of Malaysia, the Electrical and Electronics Association of Malaysia, Malaysian Textiles Manufacturers Association and Federation of Malaysian Freight Forwarders.

“While we are supportive of the proposal (for minimum wage), we are very concerned about the implementation process.

“The implementation process, we believe... would cause severe and adverse reaction to the industries,” said Lim.

The group said that the minimum wage should be staggered and implemented in phases to allow time to improve training and efficiency.

“Minimum wage must be productivity-linked. It cannot stand on its own, in isolation,” said Lim.

In addition, they appealed for the minimum wage to be different according to the industries and locations rather than a one-size-fits-all solutions, as each would operate under different conditions with different costs.

However, when asked for the desired time-frame, he said that this would depend on how much the wages would be increased, with a larger increase requiring a longer time.

Human Resources Minister Dr S Subramaniam had said on Feb 24 that the ministry is in the final stages of preparing to announce a minimum wage for private sector workers with a salary below RM900, which is expected this month.

‘Export market can’t absorb the increase’

Lim also said that the labour cost increases associated to a minimum wage law cannot be passed on to the consumer as Malaysia’s economy is export-driven, and the export market would not absorb the increase.

“They (importers) would look at this and say that, ‘okay, you’ve got an increase in cost. But why should I absorb your cost because of your country’s minimum wage policy?’” he said.

Continuing to use the plastics industry as an example, he said that 62 percent of the industry’s products are exported, and the Malaysian market is too small.

He added that many other industries represented at the press conference are also in a similar situation.