KUALA LUMPUR, Jan 4 — The Ministry of Human Resources' decision to allow small firms that payroll less than five staff until July 2023 to raise the minimum wage to RM1,500 was met with strong criticism from pro-labour activists and trade union leaders who said the deferment is unfair to low income workers.

Leaders from the Malaysian Socialist Party (PSM), union members and an independent analyst urged the government to roll out wage subsidies for eligible small businesses instead.

A wage subsidy can provide temporary support and can be based on the size and financial health of the applicant, with a properly structured mechanism reducing the risk of leakages, said Edwin Goh, an independent researcher who studies labour issues.

"Complementary measures such as systematic wage subsidies should be designed and added to our minimum wage framework for qualifying employers,” he told Malay Mail.

"The wage subsidy can allow the government to implement the changes without delay and provide temporary support for employers based on the size and financial health of their business.”

The new floor wage rate, reached after years of tough negotiations between employers, workers and the government, is meant to take effect January 1, 2023, but Human Resources Minister V. Sivakumar said last month that employers who have fewer than five employees can delay raising the rate until July the same year.

Sivakumar's predecessor Datuk Seri M. Saravanan had pushed through the enforcement amid protests from employers just months before the 15th general election, ostensibly in a bid to court support for Barisan Nasional.

S. Arutchelvan, PSM's deputy chairman described the delay as yet another sign of pro-employer bias from a political coalition that pretends to be supportive of workers' rights.

Left-leaning activists often accuse Pakatan Harapan's top leaders of promoting neoliberalism, saying their economic agenda often mirrors that of conservative rivals BN.

"Now, Prime Minister Datuk Seri Anwar’s promise to help the B40 falls flat,” he said.

"The ministers taking a 20 per cent cut seems to be just a stunt because a minister earning a RM15,000 to RM20,000 salary and taking a 20 per cent pay cut is not a big deal when compared to denying poor workers a salary of RM1,500,” the PSM leader added.

Arutchelvan also backed calls for the government to subsidise wages temporarily.

"The unity government should subsidise smallholders in paying the minimum wage rather than holding their pay for another six months,” he said.

Sivakumar said the decision to make an exception for small businesses took into account views from "various stakeholders” who are expected to face economic and financial challenges next year.

But critics of the move noted the delay also comes at a time when low-income households, the biggest benefactors to the new floor wage rate, are the most hit by soaring living costs caused by a persistent global supply chain snarl.

"The deferment assumes Malaysia’s economy will improve in the coming months, allowing employers to increase earnings and adjust financials to implement the changes for employees,” Goh said.

"However, the question of employer affordability will not subside easily due to a relatively more challenging economic outlook in 2023, globally and locally.”

The Malaysian Trades Union Congress in an immediate response to the minister's announcement said delaying raising the rate is akin to "betrayal” of low-wage workers.

Employers welcomed the move saying it would help up to half a million small companies build up cash buffers to support the minimum wage raise.