A wage hike proposal in Malaysia is pushing for a minimum salary increase from RM900 to RM1,100. Can Malaysian SMEs survive?
A Malaysian Insider article which came out this month reported that Democratic Action Party (DAP) Party-General and Penang Chief Minister Lim Guan Eng is proposing a wage hike for local workers, from RM900 to RM1,100.
Lim argued that the proposed increase would raise the incomes of 14.2 million Malaysian workers and also spur economic growth.
Included in his proposal is a five-year grace period which will delay the increase to foreign workers. He said that foreign workers “work an average of four hours overtime daily and also on rest days and public holidays”, and the increase would mean “higher overtime charges for employers, who are already having to cope with price hikes in sugar, petrol, electricity tariffs and toll rates.”
The grace period would mean that SMEs, who Lim noted are very vulnerable to inflation and have a high risk of shutting down, will not have to take the brunt of the wage hike immediately.
Protecting, Encouraging SMEs is the issue
Malaysian businesses – the majority coming from the manufacturing, construction, and agricultural sectors – rely on 2.8 million immigrant workers (1.3 million are illegal labourers). As Lim had noted, the remittance from these foreign workers have doubled from RM 10 billion to RM 20 billion over the previous year.
Recently, around 1,500 undocumented workers have been arrested, as Malaysian authorities have strengthened its fight against illegal labourers which until now have been protected by an amnesty program implemented two years ago.
I think what’s being overlooked is the fact that there is a reason why small- and medium-scale businesses are opting for foreign workers. Sheila Stanley, in her opinion piece entitled, “Malaysia forced to rely on migrant workers as locals turn away from menial jobs” which came out March last year in The Star, observed: “The almost three million migrant workers we now have are viewed as cheap labour.… The other side of the story is that Malaysians are just no longer willing to work at the bottom of the rung anymore.”
The salary increase is noble. The grace period is sensible, to a degree. But what I really want to know is this: how will SMEs save costs at the end of the day? The rising prices of goods and the crackdown on illegal workers – add to that the possibility of a wage hike – may mean that SMEs will suffer in the end.
With more barriers to success, less Malaysians will want to be entrepreneurs, which will mean fewer new businesses that can generate jobs for Malaysians.
So how does one solve it?
Let me make a very modest proposal: getting more freelancers to work side by side with Malaysian SMEs.
Freelancing: A Win-Win Situation
Malaysian employers on Freelancer.com are among the top three employers per country hiring local freelancers; from our observation, local employers hiring local professionals is actually a trend among countries where freelancing is gaining momentum. We predict it will continue in the coming years: as more Malaysian SMEs begin to realise the advantage of freelancing versus hiring full-time, more work for Malaysian freelancers will be generated.
Beyond augmenting Malaysian workers’s salaries via online jobs, freelancing through the internet will mean savings for employers, since it will take less time and money to find the right professional for tasks.
As the backbone of Malaysia’s economy, SMEs in the country need all the help they can get. StartupMalaysia.org and the Multimedia Development Corporation (MDeC) have both been eagerly assisting startups and small- and medium-sized enterprises to take advantage of online tools to boost their companies. In fact, an initiative by the latter (which Freelancer.com is a key partner) also aims to connect these local businesses with underprivileged communities in need of work. But still, more things need to be done.
Freelancing is a win-win situation for both Malaysian businesses and skilled labourers: it is an efficient solution that saves time and money, addresses the need to raise workers’ incomes, and creates a wealth of opportunities to collaborate immediately.
We believe that the Malaysian government should consider this as one of the key approaches to energize Malaysia’s economic growth.
The views expressed here are of the author, and e27 may not necessarily subscribe to them
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