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Malaysian employees support government for minimum wage policy. The implement start first time in 2014, second time July-2016 and third time starting from January-2019. The implementation of minimum wage seems to impact in different view for employees and employer. This minimum wage expected to have impact on the Malaysian economy. Workers feel happy because the household income increase. The purchase power will increase. Workers will spend extra compare last time. This can give positive movement to help Malaysia economy. When employees increase their spending, demand of the product can increase and create more jobs available. Raising the minimum wage on a regular basis helps families keep up with price inflation.
This implement will reduce the poverty of the nation. Increase workers income can reduce absconded and absenteeism. Employer will start to push and train-up their workers by provide training due to higher income pay. Productivity will increase and benefit for the organizations. Positive business can lead to good economy. The workers also will feel motivated and stay longer instead looking other companies for better paying. This is good for the company because can reduce the turnover for new recruitment and training cost.
Minimum wage would increase worker productivity and at same time reduce employee turnover. Unskilled workers feel they no need to change company for better pay because every company follow as per government instruction. All the company pay according minimum wage implementation. Once the minimum wage raise up, turnover and absenteeism reduce. Employees feel motivated and become more attractive when produce of product or service. Mostly small company would benefit with this implementation and can meet customer satisfaction.
Employer as expected feel unhappy with government decision on minimum wage. Impact for employer can seen when increase in wages income can cause operational cost higher. Increases to the minimum wage will place a burden on employers, especially small companies, resulting in slower growth and decreased levels of employment. Small organizations start to reduce the workers or closed the business due to high cost need to cover the business. Big organization either they reduce their staff or run the business with tight budget to maintain profitability. Company closure can give big impact to country. Without any competition, pricing for certain product will increase drastically. The product limited available in the market and demand from consumer would increase.
Some of company may start to think about reduce worker due to high cost paid on wages. And they plan to start use more automation robots to replace manpower. If companies cannot afford to pay a higher minimum wage for low-skilled service employees, they use automation robot and automated process to avoid hiring people in those positions altogether. Today life most of company are already performing this way. This can effected low skill group. Changes from manpower to robotic system increase unemployment and can effected low skill group.
Some business having tight in budget to running the business. This happen when operational cost increase due to minimum wage. Company need to increase the productivity and sales to cover the additional cost. At same time company may freeze new recruitment, limiting the opportunities for recent college graduates entering the job market. Unemployment would stressing government and not good for Malaysia economy. Some unemployed graduate from high skill worker will start for looking job at overseas. Country will loss professional skill workers in future.
Increase in wage can lead to increase material price in the market. Companies start to pass the cost to consumers. Purchase power and consumer willing to buy the product encourage price in the market to increase. Good example we can see today is petrol price. Workers has to pour petrol to the vehicle even though the price of fuel is change up and down every week. This would raise the cost of living for workers and possible to further another minimum wage increases.
Foreign based company would close the business and start to outsource the business at other countries with lower minimum wage standard or non-existing minimum wage. This happen when the organization run with high operational cost. The impact can see when no sales tax pay to government. This can give big impact to economy.
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