THE Malaysian government’s proposal to do away with the 10 per cent service charge imposed by hotels and restaurants has met with resistance from major stakeholders, who say that the move will hurt worker wages.
Since the introduction of a GST this month, the government has mooted the idea of only allowing restaurants and hotels that have a collective agreement with their staff to continue charging for service.
A collective agreement is a commercial agreement negotiated collectively between a company and the relevant trade union.
Authorities later suggested the removal of the service charge altogether, which the Malaysian Trades Union Congress (MTUC) and the Malaysia Association of Hotels (MAH) have criticised.
Both organisations say the service charge should remain as is for the benefit of rank-and-file workers.
MAH is urging the Ministry of Tourism and Culture to intervene and hold an inter-governmental meeting to find an amicable solution, while MTUC has threatened nationwide picketing if the service charge is abolished.
Samuel Cheah, president of MAH, told TTG Asia e-Daily today that the fee collected goes back to the staff and, while only seven per cent of the hotel industry is unionised, the Letter of Appointment contract between the employer and employee should also count as a collective agreement.
To find a resolution, the Ministry of Domestic Trade, Cooperative and Consumerism wants to hold a meeting with government agencies, consumer associations, unions and associations from hotels and the F&B industry.
Hospitality consultant, Reginald Pereira, CEO of MIHR Consulting, opined that the service charge should be incorporated into the pricing and workers be paid a fixed salary.
“Workers benefit because they get a higher contribution to the Employees Provident Fund and with a higher fixed salary, it becomes easier for them to apply for loans. Employers benefit because their payroll remains constant despite fluctuations in hotel revenue,” he said.
“When Singapore can implement fixed salaries successfully in the hospitality industry and there are no issues about it, why can’t we do the same here?”
