NST Leader: Malaysia must raise pay without raising the price of jobs

The rising costs of essential goods and services in Malaysia have led the Malaysian Trades Union Congress (MTUC) to propose a monthly wage of RM3,100 as a benchmark for the new minimum wage. This proposal has sparked a debate between workers and employers, who are divided on whether such a significant increase is possible or advisable.

While the cost-of-living argument is persuasive, simply raising the minimum wage without addressing productivity and inflation could strain businesses, especially small and medium enterprises (SMEs) and labor-intensive industries. SMEs may respond to this proposed increase by reducing jobs, hiring fewer entry-level workers, or raising prices.

This could negatively impact Malaysia's competitiveness in manufacturing and investment, making the country less attractive to foreign businesses. The government must avoid extreme positions, such as maintaining low wages to remain competitive or implementing a drastic wage increase without considering productivity, inflation, and business capacity.

Instead, a balanced approach is needed to raise wages to a more reasonable level without destroying jobs or increasing prices. A possible solution could be a gradual wage increase tied to measurable productivity and cost-of-living indicators, supported by stronger enforcement of wage progression and targeted assistance for SMEs to adopt automation, digitalization, and worker upgrades.

Despite the challenges, SMEs must recognize that technology can make their businesses more productive and workers more valuable, rather than making them disposable. The proposed minimum wage of RM3,100 may serve as a useful target, but it should not be considered an overnight mandate. The objective should be sustainable wage growth, where workers' earnings increase due to the economy producing more value, not just because the law mandates a higher minimum wage.