MSMEs exempted from new minimum wage increases, says Steven Sim

Micro, small and medium enterprises (MSMEs) will be temporarily exempted from the new minimum wage increase, according to Entrepreneur and Cooperatives Development Minister Steven Sim. The cabinet decided on the exemption after considering the sector's ability to handle higher costs amidst current economic pressures. Sim stated that the government plans to implement other measures to boost wages in the MSME sector, such as wage subsidy support under the Progressive Wage Policy, ensuring wage increases align with productivity gains.

The primary objective of this decision is to guarantee reasonable wages for workers while enabling MSMEs to maintain competitiveness, foster growth, and generate employment opportunities. This move comes in anticipation of the government announcing a higher minimum wage in the 2027 Budget, scheduled for presentation by Prime Minister Datuk Seri Anwar Ibrahim on October 9.

Economy Minister Akmal Nasrullah Mohd Nasir confirmed that any decision regarding a proposed increase to RM2,000 would be made during Anwar's 2027 Budget announcement. Nasir mentioned that the government is evaluating how to implement any increase while striking a balance between workers' welfare and employers, particularly small businesses and MSMEs, in coping with higher operating costs.

Earlier, Sim had advocated for the government to share the cost of raising wages with SMEs through wage subsidies instead of burdening businesses alone. The current minimum wage of RM1,700 has been in effect for all employers since August 1, 2023, under the Minimum Wage Order 2024.