Minimum wage hike will only benefit foreign workers in Malaysia

Foreign workers would send back the surplus of their salaries to their home countries, instead of spending their earnings in Malaysia, says employers group.
By: | February 17, 2022
Topics: Compensation and Benefits | Health and Wellness | Malaysia | News

An increase of the minimum wage in Malaysia from RM1,200 (US$287) to RM1,500 (US$358) will only benefit foreign workers in the country, said the Malaysian Employers Federation (MEF). 

This is because foreign workers would send back the surplus of their salaries to their home countries, instead of spending their earnings in Malaysia, said MEF executive director Datuk Shamsuddin Bardan. 

“Many people have argued that an increase in the minimum wage would benefit Malaysians. However, this is inaccurate as the minimum wage is for those at the lower levels,” he explained, according to the New Straits Times. 

“Based on a study in 2018 on the impact of the minimum wage increase then, about 1.8 million workers had benefited from it,” he said. “At that time, we had more than two million foreign workers and those who benefited from the increase in the minimum wage were foreign workers.”

READ: Malaysia prepares to launch job creation initiative

Shamsuddin added that foreign workers in the country reportedly remit some RM34 billion (US$8.12 billion) annually to their countries of origin through official channels, with the amount possibly going up to RM70 billion (US$16.7 billion) via unofficial channels.