Raising minimum wage may increase prices of goods too, says Sheda president

Augustine Wong

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KUCHING, Feb 6: Raising the minimum wage to enhance spending power to stimulate the economy may cause prices of goods to rise too.

Sarawak Housing And Real Estate Developers’ Association (Sheda) president Augustine Wong said such a proposal, without examining the underlining problems and cause of low minimum income therefore, will not be sustainable.

He explained that the objective of raising the minimum wage with the hope that it will increase the spending power of workers in order to stimulate the economy might even give rise to the opposite effect whereby based on previous experiences, minimum wage hikes have been proven to cause prices of goods to rise.

“Lower and middle income households tend to spend a larger percentage of their income on consumable goods (for) which prices unfortunately would have increased as a result.

“The government mandated minimum wage could also negatively impact employment levels. The negative of higher minimum wage can only be offset by increases in productivity by workers or having companies trimming down their manpower,” he said in a statement today.

He also mentioned that some employers who are forced to pay more in wages hence will end up hiring fewer workers which eventually will lead to higher unemployment.

Meanwhile, he said workers who were perhaps willing to work for lower wages are now denied work opportunities as a result of government’s mandated minimum wage.

“Policy makers should examine the underlining economic issues such as how to reduce cost of doing business by reducing red tape, increasing efficiency and promoting productivity.

“These will ensure Malaysia remains competitive globally for our exports and as an investment destination, which in the end will not only improve the real purchasing power of our lower middle income group workers but increase the income of all strata of our society.

“Otherwise, wage increases will only result in another round of inflation where minimum wage earners lose their jobs while their cost of living still increases,” he emphasised. — DayakDaily