FMM proposes RM700 as median benchmark for minimum wage

KUALA LUMPUR: The Federation of Malaysian Manufacturers (FMM) has proposed that the minimum wage level should use RM700 as the median benchmark.

In a statement yesterday, the federation said the minimum wage quantum could not be uniform across the country but adjusted according to differences in cost of living based on geographical location and rural-urban areas and differences in economic sectors.

Based on the FMM’s economic outlook for the manufacturing sector survey conducted in April/May, the mean basic salary (not including fixed allowances for general workers) was RM750 a month and the median RM700.

It said a comprehensive nationwide study should be carried out first to map out differences such as the cost of living between states and rural-urban areas, and job structures between economic sub-sectors.

“Any increase that would impact the cost of doing business should be gradual and pre-announced.

Employers should be given a two-year grace period to adjust,” FMM said, adding that minimum wage should commensurate with productivity gains, skills acquisition, training and multi-skilling and multi-tasking.

There must be greater efforts to ensure that productivity levels were in tandem with higher wages, it said.

Apart from upgrading technology, FMM said productivity-linked wage systems (PLWS) should be implemented to help identify key performance indicators on performance delivery.

“Unions are against the PLWS, which include revamping the collective agreement system to become incentive-based. Some employers are reluctant to share information with employees.

“In moving forward, FMM maintains that it would be useful to draw up clear guidelines on PLWS acceptable to both sides,” it said.

The federation also said there should be greater and concerted publicity on the exemption of incentive-based schemes from the computation of Ordinary Rate of Pay under Section 601 Employment Act 1955.

“The components of minimum wage must be clearly defined and be equitable.

“The industry’s interpretation of an equitable minimum wage is basic wage and fixed allowances. It is inaccurate and incomplete to look at basic pay only,” the FMM said.

It said that there also should be a review mechanism to prevent indiscriminate increase in minimum wage whereby the reviewing process should involve all relevant stakeholders.

The FMM also said the Government should concurrently address the issue of local labour shortage.

Besides identifying strategies and programmes to increase the mobility of local workers from rural areas, the Government should beef up support infrastructure as as employment exchanges to identify and source for local workers, it said.