Why minimum wage order implementation is a challenge to human resource managers in Langkawi hotels

Purpose This paper aims to explore the human resource (HR) challenges faced by hotel managers in Langkawi due to the implementation of the minimum wage order (MWO). Design/methodology/approach This study collected qualitative data from 18 managers and two owners from 19 hotels of various sizes and levels of service, including budget and boutique resorts on Langkawi Island, Malaysia. A semi-structured interview was used to ask the question “What are the challenges faced by hotel managers due to the implementation of an MWO?” Findings The challenges faced by the managers are: low employee productivity levels, many employees with a salary below the minimum wage rate, difficulty paying staff because of low revenue and conflicting laws and guidelines relating to the issues related to the service charge. Research limitations/implications This study provides an initial qualitative exploration of an important current legal development bearing on hotel managers in Malaysia. It provides some initial findings from Langkawi, but the findings may not represent the attitudes of hotel managers in other parts of Malaysia. Practical implications This study contributes to HR management literature by providing an insight into challenges faced by hotel managers in a developing country. To the managers, the MWO guideline is a serious challenge, as some of their employees are not productive enough to be paid at the minimum wage rate. To address the increasing labour cost, some have turned to the employment of foreign workers, whereas others have increased their casual employee numbers. These insights may serve to guide policy-makers and hotel managers in other developing countries that are planning to introduce an MWO. Social implications For the MWO to be effective, it is crucial for the government to develop effective guidelines for its implementation and for hotel employees amongst the Langkawi community to increase their level of productivity. Originality/value The Malaysian MWO policy was introduced in 2012. The policy affects employees’ remuneration and provides a challenge in implementation for the Malaysian hotel industry, especially in Langkawi. Although many studies on MWO implementation have focused on unemployment, this study provides the managers’ perspective on the challenges faced due to the implementation of this policy and identifies reasons why the unemployment rate for local workers may increase after the implementation of an MWO.