FACULTY OF BUSINESS AND MANAGEMENT  

INTRODUCTION TO HUMAN RESOURCE

NUR ALIEFAH ILYANNA BINTI ROSLEE (2022793403)

GROUP:
BA240A1

PREPARED FOR:
PROFESSOR MADYA DR CHUNG SIEW MEE@ELLEN CHUNG

DATE OF SUBMISSION:
6 JUNE 2022
 The Prime Minister of Malaysia, Dato’ Sri Ismail Sabri Yaakob, announced on 19
March 2022 that the national minimum wage will be revised to RM1,500 per month
from 1 May 2022. As the result, starting from 1 May 2022, all the employee’s
minimum wage salaries will be confirmed set at RM1500. Meanwhile, for employers
who employ less than five employees, the effective minimum wage of RM1,500 will
start on January 1 of 2023. Also mentioned, human resources minister M Saravanan
announced that the RM1,500 minimum wage does not apply to domestic workers.
However, he did not provide any specific reason for the exclusion. In a statement,
Saravanan provided the terms of the implementation of the Minimum Wages Order
2022, which was officially gazetted on April 27. Plus, Saravanan also said that his
decision on the minimum wage is appropriate to make sure the welfare of workers,
especially those with low income would also get benefit from the increase in
consumer purchasing power.

From Malaysia Minimum Wage Order (MWO) 2022, there will be an inflation
effect on the economy. This is meaning that the price of goods and services will be
increasing as the demand in the economy is increasing as well. The firm would likely
increase the price of goods and services which made their profit increase and also
investments made to one’s company also will be increasing. In 2022, when input
prices are high and demand is increasing, headline inflation is expected to range
somewhere in the range of 2.2% and 3.2%.t. The underlying inflation rate, as
measured by core inflation, is also predicted to rise this year, averaging 2.0 to 3.0%.
Effectively, an increase in minimum wage could result in no change to the low-
income earning workers as their spending would be hiked up as well due to the
increase in pricing. To quote the Malaysian International Chamber of Commerce and
Industry branch chairman for Sabah Datuk Seri Wong Khen Thau: “with RM1,500 as
a minimum wage but with everything else getting more expensive, nothing is solved.
It’s just going back to square one.
 There are many methods used to control inflation and while none are sure bets,
some have been more effective and inflicted less collateral damage than others. One
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of the solutions is governments can pursue a contractionary monetary policy, reducing
the money supply within an economy. Contractionary policy is a monetary measure
referring either to a reduction in government spending, particularly deficit spending,
or a reduction in the rate of monetary expansion by the central bank which is Bank
Negara Malaysia. It is a type of macroeconomic tool designed to combat rising
inflation or other economic distortions created by central banks or government
interventions. Today, contractionary monetary policy is a more popular method of
controlling inflation. The goal of a contractionary policy is to reduce the money
supply within an economy by increasing interest rates. This helps slow economic
growth by making credit more expensive, which reduces consumer and business
spending. Higher interest rates on government securities also slow growth by
incentivizing banks and investors to buy treasuries, which guarantee a set rate of
return, instead of the riskier equity investments that benefit from low rates.

Next, recently Malaysia is taking steps to address rising food prices as a result of
inflation, according to the ministry. The legal minimum or maximum prices set for
certain items are referred to as "price controls." In a free market, price controls are
usually imposed by the government. They are typically used as a direct economic
intervention to control the affordability of particular products and services, such as
rent, gasoline, and food. Through the implementation of AKHAP 2011, the Ministry
controls the prices of the following items: granulated and coarse refined white sugar,
liquid petroleum gas, fuel RON 95, diesel, face masks, and goods covered by a
specific Festive Season Price Control Scheme. If an economy's minimum wage were
to rise, for example, consumers would buy more things, causing demand to rise.
Businesses raise product and service prices in response to rising aggregate demand

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and rising labor burdens. Although earnings have risen, rising prices have prompted
workers to seek even more pay. If higher salaries are granted, a spiral of rising prices
could ensue, repeating the cycle until wage levels are no longer sustainable. Price
controls can be beneficial and detrimental. They contribute to the affordability and
accessibility of certain goods and services, such as food and housing. They can also
benefit corporations by removing monopolies and increasing competition in the
market. However, it can also have a negative impact by causing supply shortages or
overabundance, underground markets, and a decrease in the quality of goods and
services available on the market.

To conclude this issue, we have to accept and support the effort of our
government in order to help people especially those from low income plus to enhance
our nation’s economy either import or export economy. Then, we have to think
rationally, just like Malaysian Trade Union Congress (MTUC) president Abdul Halim
Mansor told CNA that the new minimum wage was “reasonable” for now and that it
was a good start. “We support the raise and it is a good start. We understand the
concerns of the employers, but they also have an obligation to ensure that the people
have purchasing power. Otherwise, the economy will not develop because the workers
do not have purchasing power,” he said on his speech. So, it is a very important aspect
of any job in this world of wage it pays. Wages drive workers to make a living from
their labor and also provide and loyal to an employe.
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