Impact of minimum wage on labour cost in the hospitality industry in Malaysia
Impact of minimum wage on labour cost in the hospitality industry in Malaysia
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2014-00-00
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Gan, J. E.
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Abstract : Malaysia has adopted a minimum wage policy through the Minimum Wages Order 2012 (MWO). This article examines the probable impact of minimum wage on labor cost in the hospitality industry. The findings show that minimum wage is unlikely to cause a significant increase in salary cost. This is because government guidelines allow hospitality operators to restructure pay components to meet the minimum wage rate. In particular, service charge can be converted into wages for the purpose of the MWO. However, while salary levels are likely to remain stable, pension contribution cost may increase. Under the Employees Provident Fund Act 1991, a private sector employer must make contributions towards the employees’ retirement savings. Such pension contribution is calculated as a percentage of an employee’s salary. By contrast, no pension contribution is payable in respect of service charge. In the past, hospitality operators in Malaysia have maintained low pension contribution cost by offering low basic salary but proportionately higher level of service charge. In view of the MWO, hospitality operators may convert all or part of service charge into wages. This means that pension contribution will be calculated based on higher basic salary. Consequently, hospitality operators that seek to minimize salary cost increment through the conversion of service charge to wages can expect their pension contribution cost to increase.
Full text access : School of Hospitality, Tourism & Culinary Arts, Taylor’s University, Malaysia (e-mail: jooee.gan@taylors.edu.my)
Article submitted for : The 12th APacCHRIE Conference 2014 (Kuala Lumpur, 21-24 May 2014).
Full text access : School of Hospitality, Tourism & Culinary Arts, Taylor’s University, Malaysia (e-mail: jooee.gan@taylors.edu.my)
Article submitted for : The 12th APacCHRIE Conference 2014 (Kuala Lumpur, 21-24 May 2014).
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Impact of minimum wage on labour cost in the hospitality industry in Malaysia
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Gan, J. E.
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2014-00-00
Description
Abstract : Malaysia has adopted a minimum wage policy through the Minimum Wages Order 2012 (MWO). This article examines the probable impact of minimum wage on labor cost in the hospitality industry. The findings show that minimum wage is unlikely to cause a significant increase in salary cost. This is because government guidelines allow hospitality operators to restructure pay components to meet the minimum wage rate. In particular, service charge can be converted into wages for the purpose of the MWO. However, while salary levels are likely to remain stable, pension contribution cost may increase. Under the Employees Provident Fund Act 1991, a private sector employer must make contributions towards the employees’ retirement savings. Such pension contribution is calculated as a percentage of an employee’s salary. By contrast, no pension contribution is payable in respect of service charge. In the past, hospitality operators in Malaysia have maintained low pension contribution cost by offering low basic salary but proportionately higher level of service charge. In view of the MWO, hospitality operators may convert all or part of service charge into wages. This means that pension contribution will be calculated based on higher basic salary. Consequently, hospitality operators that seek to minimize salary cost increment through the conversion of service charge to wages can expect their pension contribution cost to increase.
Full text access : School of Hospitality, Tourism & Culinary Arts, Taylor’s University, Malaysia (e-mail: jooee.gan@taylors.edu.my)
Article submitted for : The 12th APacCHRIE Conference 2014 (Kuala Lumpur, 21-24 May 2014).
Full text access : School of Hospitality, Tourism & Culinary Arts, Taylor’s University, Malaysia (e-mail: jooee.gan@taylors.edu.my)
Article submitted for : The 12th APacCHRIE Conference 2014 (Kuala Lumpur, 21-24 May 2014).
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Labor laws and legislation--Malaysia
Minimum wage--Law and legislation--Malaysia
Hospitality industry--Law and legislation--Malaysia
Labor unions--Malaysia
Pensions--Law and legislation--Malaysia
Wages--Hotels--Law and legislation--Malaysia
Minimum wage--Law and legislation--Malaysia
Hospitality industry--Law and legislation--Malaysia
Labor unions--Malaysia
Pensions--Law and legislation--Malaysia
Wages--Hotels--Law and legislation--Malaysia
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School of Hospitality, Tourism and Culinary Arts