Federation of Malaysian Manufacturers (FMM) president Yong Poh Kon today decried the poor implementation of minimum wage, especially as manufacturers have been kept in the dark on details.

“It has not been a very smooth way of implementing policy. Normally, time would be given to adjust their business.

NONE “Now we don’t even know what allowances are included and not included in the minimum wage,” he told reporters at Wisma FMM in Bandar Sri Damansara, Selangor.

Human Resources Minister Dr S Subramaniam yesterday announced that the RM900 minimum wage for the private sector will be gazetted on July 1 and enforced from January 2013.

Yong said that six months is generally sufficient for companies to adjust their wages and payroll systems, but some companies are asking for more time due to “knock on effects”.

“It doesn't just affect new employees... employees who have been around for two or three years cannot be earning the same as the new employees so their salaries will need to be adjusted.

“The devil is in the details, and until (details) are published, companies cannot compute wages,” he said.

He said that the minimum wage is likely to drive up wage costs by up to 60 percent for East Coast companies and between 20 to 30 percent for companies in the Klang Valley.

More than half of those surveyed by FMM in its inaugural business conditions survey last May said that they expect the minimum wage to have a “high to severe” impact on their businesses.

New retirement age double whammy for firms

Yong added that while the minimum wage affects the younger end of employees, companies are also hit by the new retirement bill.

The bill, which was tabled in Parliament yesterday, will make it mandatory for private companies to extend employment of workers for five years from the age of 55 to 60.

“It’s a squeeze on both ends (of labour costs),” Yong said.

“Judging from the working span of 35 years or so, about 3 percent of a companies’ employees will be about to retire.

“This means adding the number of employees by 3 percent each year, making it 15 percent more persons at the end of five years,” he said.

He noted that this could also affect new employment, with companies unable to hire more.

“But this will depend on whether there is continuation of foreign labour. If there isn’t, then companies can soak up (local workers),” he said.

More than half want retirement at 55

He added that  of the 386 respondents surveyed by FMM, “a vast majority”, or 51.5 percent,  preferred the retirement age to remain at 55.

Only about one third would like to see the mandatory retirement age at 60.

“Generally, companies in this country are realising that skilled labour is hard to get they would want to extend from 55 to 60, but there needs to be flexibility whereby those fit, willing and able can extend.

“Hiring and firing laws in this country are rigid and it is an issue for some companies if they are forced to extend employment to 60 years.”