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Sunday, September 11, 2016

Malaysian Minimum Wage Order forcing establishments to close due to unsustainable fees

PETALING JAYA: Childcare centres could be on their way out by the end of the year, with between 80% and 95% of the 5,421 registered centres likely to close down – no thanks to the rise in minimum wage.

Most of those charging below RM300 are likely to fold by December.

A survey of childcare centres in Terengganu, Pahang, Kedah, Perak, Negri Sembilan and Sarawak showed that almost all of those catering to the low- and middle-income families, are either preparing to close shop or have already folded in the past six months, said Association of Regis­tered Childcare Providers Malaysia president P.H. Wong.

The Minimum Wage Order 2016 was implemented in July.

On average, operators charge between RM250 and RM350 per child. But, to be sustainable, they have to charge at least RM450, Wong told Sunday Star.

A childcare centre in a single storey terrace corner lot is allowed to house a maximum of 20 children. If they charge RM300 per child, the total income is only RM6,000 per month.

“At the very least, you’ll need four personnel. With minimum wage of RM1,000, that’s RM4,000 without EPF contributions. What about other operating costs?” asked Wong.

Under the minimum wage rule, workers in the peninsula are entitled to not less than RM1,000 a month while it will be RM920 for those in Sabah and Sarawak.

Those who flout it will be liable to a fine and a jail term.

“Preliminary results indicate a worrying trend. It’s the same everywhere.

“Those that managed to stay open have adopted ‘creative ways’ to survive,” said Wong, adding that in Malacca, operators had resorted to hiring contract staff and part-timers or cutting back on the work hours, to avoid paying minimum wage.

Some make their staff take on more responsibilities or conduct evening classes to earn more.

“Others only accept older children as they require less attention but the demand is for centres that accept babies,” she said.

Unlike other businesses, a centre’s income was limited by the number of children they were able to take, she said.

She said operators could not raise their fees because parents would move their children to cheaper unlicensed centres or babysitters, putting the chlidren’s safety at risk.

Women, Family and Community Development Ministry Deputy Minister Datin Paduka Chew Mei Fun said the Government was aware of the issues faced by the operators.

“A paper on the minimum wage impact is being prepared. It’s a concern and we’re addressing it holistically,” Chew, who leads a taskforce on early childhood care and education, said.

She said an intensive three-day lab would be held this month to look into making quality childcare accessible and safe.

A report would be submitted to Women, Family and Community Development Minister Datuk Seri Rohani Abdul Karim soon, she said. - Christina Chin The Star

Doing Better for our kids

Faced with mounting challenges, childcare centre operators are looking to the Government, employers and parents themselves to ensure our children get quality care and education.

NATIONWIDE, there’s a critical shortage of registered childcare centres, or taska, that provide affordable services.

Malaysia’s population, as of July 1 this year, is 30,751,602. More than 40% of the population are children aged below 18 years. And of this group, children aged between zero and four years are the majority.

With an annual population growth of about 3%, there’s a growing demand for childcare centres, says Association of Registered Childcare Providers Malaysia president P.H. Wong.

Wong is also a member of the Ramping Up Early Childhood Care and Education (ECCE) task force under the Women, Family and Community Development Ministry, and a Positive Parenting management committee member. Positive Parenting is an expert educational programme for parents initiated by the Malaysian Paediatric Association and various non-governmental organisations.

In almost all states – especially in the rural and semi-rural districts – there are not enough registered centres, says Wong.

Few operators want to run centres in low income communities where parents cannot afford the fees. And existing ones are struggling to meet rising operating costs, especially with the minimum wage ruling effective July this year.

Wong, however, stresses that the minimum wage ruling is long overdue. The problem isn’t that operators don’t want to pay – it’s that they cannot afford to.

“Operation costs are already high because of the strict space and staff ratios, compulsory CCTV and exorbitant local council licensing fees. Minimum wage just makes it worse. It’s tough to break even, what more make a profit,” she says.

And access to financing and difficulties with getting regulatory approvals are big challenges, she laments.

The problem is compounded by the perception parents have of childcare centres and early childhood development. They think it’s the same as sending the child to a babysitter who will, most likely, simply offer custodial care; early childhood development care, on the other hand, has activities for the holistic development of children aged zero to four years.

Parents, Wong feels, are unwilling to pay a fair price for licensed childcare because they think “the-aunty-next-door” does as good a job for much less.

“About 70% of centres nationwide charge below RM350 for 20 days of full-day care. This works out to RM1.75 per hour. It doesn’t reflect the importance of having a qualified professional look after your child,” she says.

There’s a lack of trained care providers and operators as salaries are still very low even after the minimum wage ruling. And, very few youngsters are interested in early childhood care and education because there’s no career pathway.

“Currently, childcare providers only need to finish the SPM and Permata Basic Childcare Course – a compulsory certification under the Social Welfare Department. But as long as qualifications remain at certificate level only, the quality of service remains a challenge and the importance of investing in the first four years of brain development is severely undermined,” Wong says, adding that out of 18,769 childcare providers in the country, only 1,551 are degree holders.

Quality early childhood care and education allows mothers to contribute to the workforce and is a social equaliser, she believes. It provides children with a level playing field to have a head start in life.

The majority of school dropouts and juvenile delinquents come from economically and socially deprived families. They grow up without the benefit of quality early childhood care and education, she shares.

Quoting economist James Heckman, a Nobel laureate at the University of Chicago, Wong says it makes financial sense to invest in early childhood education because it will lead to increased productivity and better outcomes for children in health, nutrition and cognitive development later on.

“Since the inequality begins before or at birth, Heckman believes that the best time to address those issues are during early childhood.

“If investments are not made in the early years, lower earnings, unemployment, healthcare costs and even increased crime will be the consequences for society to bear when the child grows up,” she says, pointing to how we have one of the lowest early childhood and education enrolment rates in the region.

With just 5,421 licensed childcare centres catering for 53,497 children, it’s clear that almost 90% of our children are being looked after by stay-at-home mums or illegal centres and babysitters – which puts the children at high risk of maltreatment and neglect, she sighs.

Many women in low and middle income communities don’t seek employment as childcare expenditure would negate their salaries, she observes.

“The prevalence of single income households increases incidences of poverty and further reduces access to childcare.

“In Singapore, public funding for early childhood and education covers 75% to 85% of childcare costs. But here, even lower income families must bear most of the costs, which can range from RM300 to RM2,000 in the Klang Valley,” she says.

Malaysians, she notes, are already having fewer children because they want to provide the family with a higher quality of life. If childcare service is not made affordable, fertility rates will drop even further, she says. - Christina Chin The Star

But it’s a necessity

CHILDCARE services are a necessity, no longer a luxury.

Regulated childcare centres are a must because, unlike before, both parents are forced to work nowadays to make ends meet, says Federation of Malaysian Consumers Associations secretary-general Datuk Paul Selvaraj.

Childcare is a critical service, he feels. And taking care of kids isn’t easy. Minders must be skilled and competent. Leaving kids at unlicensed and unregulated centres is dangerous because a child’s future is at risk, he stresses.

“The Government has to help families cope by ensuring that we have access to affordable childcare services. It’s a basic right. At the same time, operators have to make a profit,” he says, adding that parents cannot expect operators to continue a loss-making business.

Datuk Dr Raj Karim reminds parents that times have changed. She is president of the Malaysian Council for Child Welfare, an umbrella body comprising more than 30 non-governmental organisations that works with the United Nations Children’s Fund to create awareness in Malaysia about child injury and accidents.

Leaving your young child with the neighbour is risky, she insists. Unsupervised care have led to many cases of neglect, abuse and maltreatment.

It’s not like those days when babysitters were sincere in wanting to help. Now, it’s all about the money, she says.

“I was a working mother and a makcik helped look after my family but she was loyal and close to us. These days, most people don’t even know their next door neighbours.

“Is your babysitter mentally sound? Does she have family members who could potentially harm your child? What about accidents at home?” she says.

Urging the Government to regulate childcare fees, Dr Raj says some centres’ fees are exorbitant. If fees are regulated, the Government can subsidise households that don’t earn enough for childcare. Only with accessible quality childcare can a mother return to the workforce, she stresses.

“Quality care during early childhood is an essential, basic right. That’s when emotional, mental and character development, takes place,” she adds. - The Star

It’s a no...

IT’S tough for bosses to help.

Most employers won’t be able to help their staff with childcare benefits, Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan says.

Very few employers can afford childcare subsidies as there are no incentive for them to do so, he says.

Under current tax laws, childcare allowance of up to RM250 per month is not taxable, but this only applies to employees. Companies don’t get such breaks, he says.

That’s why, he says, they are not keen on giving childcare subsidies. The Government, he says, should give tax incentives like double tax deductions to encourage companies to give childcare subsidies.

There are 5.18 million working women and about 500,000 babies born yearly. So, based on these numbers, he estimates that there are about three million children aged six and below in need of care.

Of the three million children, 14% are sent to childcare centres, 24% are cared for by maids and 27% are looked after by their grandparents, he says. (The MEF does not have details accounting to the remaining 35%.)

Private companies are reluctant to provide childcare centres at the workplace because of cumbersome bureaucratic procedures in getting approval from the relevant authorities.

The “building cost” tax incentive, he feels, is also not attractive for private companies as it is spread over a 10-year period. Assuming the cost of establishing a childcare centre is RM1mil, an employer can only claim a tax allowance of RM100,000 yearly over a decade, he explains.

“Only 24 private companies have childcare centres for their staff. It’s more common in government-linked companies,” he says.

Cheaper alternatives must be looked at, as high fees charged by registered childcare centres make it tough for working women to send their children there, he feels.

He suggests setting up community childcare centres in residential areas where such facilities can be shared by staff living in the vicinity.

“Community childcare shouldn’t be profit-orientated and the quality standards must be set by the Government.”

Is your childcare centre legal?

To locate licensed childcare centres, report incidents/abuse, join local community-building events and source for early childhood care/ education information, go to The newly launched central directory and resource platform set up by the Association of Registered Childcare Providers Malaysia and the National Child Development Research Centre is aimed at keeping kids safe.

Holistic solution soon

THE Government is coming up with holistic measures to make quality childcare affordable and accessible.

A multi-pronged solution is in the works, assures Women, Family and Community Development Ministry Deputy Minister Datin Paduka Chew Mei Fun.

Chew, who leads a task force on early childhood care and education, says there are various factors effecting the industry so there is no single silver bullet solution.

“We’re monitoring the industry from a macro and micro level to address all issues comprehensively,” she says.

She says the ministry is working closely with the Association of Registered Childcare Providers Malaysia to improve the service. The ministry has been gathering data in the last two years and is in the midst of compiling everything.

“We need to address this from several aspects, including amending existing regulations. For example, a new rule to allow the setting up of centres on the third to fifth floors will be implemented soon. Currently, childcare centres are only allowed on the first and second floors where rent is high, so the new rule will help lower cost for the operators,” she explains.

The ministry is also looking into online training for care providers so that they can undergo practical on-the-job training while studying. This, she says, will further reduce the operators’ costs.

The problem is that many caregivers treat this as temporary job while waiting to continue their studies or until something better comes along. So operators are reluctant to invest in their training. That’s why we must promote, upgrade and make child-caring a recognised profession, she says.

Urging parents to change their mindset, she says the perception that centres are like traditional nannies must change. Traditionally, a nanny just feeds, accompanies and looks after a child. But a trained care provider has knowledge and skill. They do more, she adds, like provide a safe environment and prepare nutritious and hygienic food for their charges.

“Send your kids to a registered centre because it means that the care providers are trained and the operators must comply with density ratios. It’s also easier for the authorities to monitor and make sure that the centre is up to mark,” she says.

Operators too must learn to balance their accounts by accepting more older kids.

The care provider to child ratio is:

> Infants 0-1: 1 staff : 3 infants

> 1-2 years: 1 staff : 5 children

> 3-4 years: 1 staff :10 children

So centres can accept more older kids if they’re suffering losses, Chew points out. If you want to cover your costs, you should take more of those aged three to four, she says.

“On the other hand, it’s a problem too when centres refuse to take babies because of the costs involved. That’s why the Government has introduced various programmes that allow women to take time off to care for their newborns before returning to the workforce,” Chew says.

Encouraging the corporate sector to set up centres, she says the request for subsidies is being studied. Employers, she says, must realise that looking after their staff's families will result in higher productivity because parents who have peace of mind will focus better on their jobs.

The Government, she adds, is also engaging with all relevant quarters, including the Real Estate and Housing Developers Association Malaysia and local councils, to ease the burden of operators.

“We’re lobbying local councils to treat childcare centres as social service providers rather than a business because this will lead to lower costs for them.

“And, we’re requesting that developers include childcare centres when planning townships. If a corner lot can be designated and approved by the local council as a residence/childcare centre, an operator can move in and start the business immediately without having to get the consent of neighbours or applying to change the building’s usage,” says Chew.

This, she feels, would be a win-win situation because the local council will study the traffic flow and safety aspects at no additional cost.

The developer may even get a higher price for that unit because of the dual usage status.

While the Government provides some childcare subsidy to civil servants and those who qualify, operators must improve their service so that they can justify higher charges.

She says monthly childcare fees can range from RM200 to RM2,000 per child but most centres only charge between RM250 and RM400.

“Operators must give good, quality service. And parents must pay more if they can afford it,” she adds.

Cheaper fees, please

QUALITY childcare is expensive.

Zuhainy Zulkiffli, 33, sends her kids to an unregistered childcare centre in George Town because it’s what the family can afford.

Registered centres charge more than RM400 per child, which she feels is too much.

The unregistered centre her four-month-old son, Izz Zaryl Zaharin, and three-year-old daughter, Zandra Zahara, go to only charges between RM300 and RM350.

The working mother was heartbroken when she found out that Zandra had been abused at a previous centre.

However, she disagrees with a fee hike. She thinks it’s unfair to parents.

“One care provider can take care of a few kids. Don’t tell me the operators cannot make a profit. Many of my friends were forced to quit their jobs because centres are charging too much as it is,” she argues.

A father who wants to go only by Tan, 40, sent his newborn to a babysitter until the boy was two. He paid RM1,000 per month to the aunty next door. From age two to four, his son was left at a childcare centre in Cheras, Kuala Lumpur.

“For RM650, they look after my son from 8am to 7pm. It’s reasonable. I’m not sure if the centre is legal but it’s very popular,” he shrugs.

Like Tan, Jennifer Kong, 40, sends her daughter to a babysitter because it’s convenient and cheap.

Besides the monthly RM700 fee, the aunty gets 14 days of leave, a Chinese New Year ang pow, and a yearly bonus.

“I buy the ingredients for aunty to cook so I’m not worried about what she’s feeding my daughter. Aunty has been caring for her since she was three months old. She’s four now,” she says.

There’s a big difference when your child goes to a good, registered centre, says Koh Chee Khian, 45.

The RM3,000-plus he pays per semester is “not cheap” but he feels it’s worth it because his son gets the best food – like churros – and attention.

The main reason for sending his first born to a centre is so that the child learns to socialise and share.

“My boy started going to the centre in Bangsar (KL) when he was 16 months. He’s there eight hours a day, twice a week.

“This centre is among the best and the environment is really different from the cheaper ones where there are just too many kids,” he says.

But despite coming from a dual-income household, Koh says he will have to look for somewhere less pricey as he’s planning to send his son for full-day care next year.

“No doubt the current centre is very good. My son is disciplined, can colour, sing and dance at such a young age. I would never trust an illegal centre to care for him,” he says. - The Star

Operators' dilemma 

CENTRES still in business have no choice but to up their fees.

Zubaidah Husin, who runs four centres, has raised her fees from RM350 to RM450.

“The profit is not much but most of us continue because of passion. We do this to help working mothers so we charge only what they can afford to pay.

“Since the RM900 minimum wage ruling was introduced, we’ve had problems coping. Now that it’s RM1,000, how can we cope without upping our fees?” she says

Zubaidah, who is also the Association of Childcare Providers Pahang president, has been in the business for 14 years.

Before the minimum wage ruling, RM700 was the maximum operators in Pahang paid their staff so they were able to charge RM350 per child. Most staff, though, were paid an average salary of RM450 but with food and lodging provided.

“Now almost 70% of the operators are not paying their staff a minimum wage because they can’t afford to. If there is a crackdown by the authorities, these centres will be forced to close,” she says.

She does sympathise with parents, and she believes that many – especially those with two or three kids – are already struggling to make ends meet.

Association of Childcare Providers Terengganu president Wan Najmyah Wan Yussof, who has been running her centre since 2009, agrees.

She charges RM400 for babies and RM350 for children one year and above.

The situation is critical, she insists. Many of the 160-odd operators in Terengganu are at their wits end.

“Most who are still in business are using income from elsewhere to keep their centres from going under because they love kids.

“Personally, I’m using profits from my kindergarten to help keep my childcare centre running,” she says.

She says the association has appealed to the state government to subsidise training and salary costs.

A childcare guidebook on quality standards is also in the pipeline. This, she says, will ensure a minimum standard for all centres and help standardise the fees.

Operators want to increase their fees but they are afraid the parents will take their kids home. Previously when operators tried to raise their fees slightly, that’s what happened, she says.

“The problem is, we don’t know whether parents really cannot afford to pay more or they just refuse to,” she says, adding that most families there have two kids.

More centres needed

The Government aims to have a workforce comprising at least 59% of women by 2020. To do that, we must have more registered childcare centres to cater to these women’s children, Women, Family and Community Development Minister Datuk Seri Rohani Abdul Karim said. On Aug 14, Sunday Star reported that Malaysia is far from its target of having 13,200 registered childcare centres by 2020. Currently, there are not enough centres to cater to 3.2 million children under the age of four whose parents are in need of these services.

Number of registered childcare centres nationwide:


Number of children:


Number of educators:


Source: National Child Development Research Centre

Is your childcare centre legal?

To locate licensed childcare centres, report incidents/abuse, join local community-building events and source for early childhood care/ education information, go to The newly launched central directory and resource platform set up by the Association of Registered Childcare Providers Malaysia and the National Child Development Research Centre is aimed at keeping kids safe.



Total private centres surveyed: 14


RM1,840 to RM9,150


RM2,740 to RM9,630


Total private centres surveyed: 203

Forced to close after paying minimum wage:

36 or 17.8%

Not paying minimum wage:

142 or 69%

Paid minimum wage and either made a small profit or loss:

25 or 12.3%


Total private centres surveyed: 36

Forced to close to avoid fine for failing to pay minimum wage: 95%

Babies and children affected: 2,515

Childcare staff made jobless: 736


RM1,540 to RM11,000


RM2,260 to RM17,615


Total private centres surveyed: 58

Fee range (babies to age four):

RM220 to RM300


Total income:


Total costs (ie, salary, EPF, Perkeso, food, rental, utilities and telephone bills, Internet bill, cleaning/household items, learning tools, stationery, activities, celebrations, emergency fund, income tax, GST):


Losses: RM980


Total income:

RM7,800 to RM25,200 (depending on location)

Total costs (ie: salary, EPF, Perkeso, food, rental, utilities and telephone bills, Internet bill, cleaning/household items, learning tools, stationery, activities, celebrations, emergency fund, income tax, GST):

RM15,723.10 to RM27,184.05 (depending on location)

Losses: RM1,984.05 to RM14,059.10 (depending on location)

Note: All survey participants are registered childcare centres.

Source: Association of Registered Childcare Providers Malaysia.


New minimum wage policy to take effect July 1 The Star

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