KUALA LUMPUR – As the new minimum wage of RM1,700 per month takes effect today, a business chamber has urged companies to absorb part of the increased operational costs to prevent significant hikes in the prices of goods and services.
The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) president, Datuk Ng Yih Pyng, acknowledged the necessity of a reasonable wage increase, given the rising cost of living and inflation affecting 4.37 million workers.
However, Ng pointed out that some businesses, particularly micro, small, and medium enterprises (MSMEs), would struggle with higher operational costs amid current economic challenges. He warned that this could lead to increased prices for goods and services.
“We hope that businesses would be able to partially absorb increases in cost to ensure no significant increases in the prices of goods and services.
“Hence, an increase in minimum wage must be matched with a corresponding rise in productivity growth through upskilling and reskilling to maintain a low cost per unit of output produced,” he said in a statement.
Ng also highlighted concerns from businesses that a single national minimum wage policy might not be suitable for all states due to economic disparities between developed and less developed regions. He noted that MSMEs in less developed states may struggle to cope with the higher wage requirements due to weaker demand conditions.
As a solution, he suggested that the government consider implementing a minimum wage structure based on state and local economic conditions, factoring in socio-economic and demographic differences.
He argued that a regional minimum wage would be more effective than a uniform national policy, as it would reflect varying costs of living, economic development levels, and labour market conditions.
“Given the increasing business costs, ACCCIM would like the government to best manage the proposed implementation of a multi-tiered levy, especially for SMEs, and reconsider the mandatory Employee’s Provident Fund (EPF) contribution for non-citizen workers.
“(Therefore), ACCCIM urges the government to continue supporting businesses in the adoption of technological advancements, digitalisation, and automation, as well as implementing upskilling and reskilling programmes to future-proof the workforce,” he added.
Ng’s concerns over the wage hike’s impact on operational costs align with those expressed by the Small and Medium Enterprises Association of Malaysia (Samenta) president, Datuk William Ng. He told Scoop last year that the wage increase comes at a time of “compressed margins” for SMEs.
He also cautioned that SMEs in Sabah and Sarawak, in particular, may struggle to implement the new rate, potentially leading to job losses.
Meanwhile, the Federation of Malaysian Manufacturers (FMM) has acknowledged the government’s efforts to enhance workers’ welfare and purchasing power under the Ekonomi MADANI framework. FMM recognises the gradual adjustment of the minimum wage as a necessary step but stresses the importance of a balanced approach to its implementation.
FMM president Tan Sri Dato’ Soh Thian Lai emphasised that minimum wage should not be treated as a benchmark starting salary for all employees. Instead, wages should be determined by job scope, credentials, and responsibilities to ensure a competitive and productive workforce. He advocated for a productivity-linked wage system that rewards workers based on their contributions and skills development.
FMM also expressed concerns over the nationwide implementation of the RM1,700 minimum wage, warning that economic disparities between states could lead to uneven impacts on businesses. The organisation proposed state-based or regional models for wage adjustments, in line with provisions under the National Wages Consultative Act 2011, to better reflect local economic realities.
Additionally, FMM called for enhanced stakeholder engagement through the National Wages Consultative Council (NWCC) and urged comprehensive studies on the socio-economic impact of future minimum wage policies.
“The substantial increase in the minimum wage, while well-intentioned, poses challenges for businesses already grappling with rising operational costs, inflation, and economic uncertainties, particularly for manufacturers in labour-intensive sectors,” said Soh.
FMM urged the government to provide transitional support measures such as tax incentives, grants, or financial aid for automation and upskilling initiatives to help businesses comply with the wage hike. Special considerations should also be given to SMEs in regions most affected by the increase to ensure their sustainability and competitiveness.
FMM reaffirmed its commitment to working alongside the government to ensure the successful implementation of wage policies that balance worker needs with business sustainability. – February 1, 2025.