Source: The Star (View expressed here is solely the opinion of the source)
KUCHING: The Sarawak Timber Association (STA) is of the view that the implementation of a minimum wage scheme would be counterproductive if done without a holistic reform of labour policies and the country’s economy.
“Before a holistic economic reform is in place, the minimum wage must be fixed by the Government at reasonable rates that commensurate with the growth in the productivity of its workforce so that employers are able to pay and at the same time keep the business going,” said a statement issued by STA chairman Datuk Wong Kie Yik yesterday.
It pointed out that Human Resources Minister Datuk Dr S Subramaniam had announced that the proposed minimum wage rate would be in the range of RM800 to RM1,000 per month.
STA said the forestry and timber industry in Sarawak was highly dependent on its labour workforce because many tasks could not be automated.
It pointed out that its survey had found that there were about 32,000 general workers currently in labour-intensive jobs and at a minimum wage of RM800 a month, the labour costs would increase by RM150mil to RM250mil a year, without taking into consideration the ripple effects of the minimum wage on other employees in the industry.
“Past experience tells us that our industry could never procure sufficient local employees for its manufacturing sector and in most cases, about 90% of the employees in the timber manufacturing factories are foreign employees.
“Given that, the increase in wage rates is not likely to benefit the local labour force in terms of more employment opportunities in the forestry and timber industries for local employees.”
STA said that as the timber industry was highly dependent on the export markets, the sudden increase in the cost of doing business would lead to increase in the process of our timber products and thus render the products less competitive compared to similar products from competitors like Indonesia and Vietnam.
Similarly, it said the price increase would trigger an inflationary effect on the domestic market which would eventually reduce the actual purchasing power of the employees and negate the purpose of the minimum wage.
“STA strongly believes that a holistic reform to the country’s economy inclusive of export-import policies should first be put in place to ensure that the employers’ ability to pay minimum wage is sustainable in the long run. Hence, there is a need to fix the minimum wage at a reasonable rate.
“In addition, to ensure that employers in the timber industry could sustain their businesses, employers ought to be given ample time to adjust accordingly to the minimum wage implementation.
“It is the view of STA that the implementation of the minimum wage from a viable lower rate to be progressively increased to the officially fixed minimum wage rate over a period of three years would be more appropriate for the country as a whole.”