MSMEs exemption from minimum wage hike will give businesses 'breathing room'

KUALA LUMPUR: The Malaysian government's temporary exemption of micro, small and medium-sized enterprises (MSMEs) from further minimum wage hikes will provide businesses with valuable breathing room, according to the SME Association of Malaysia (SME Malaysia). According to its national president, Dr Chin Chee Seong, this move will enable MSMEs to cope with rising costs and ongoing economic challenges while safeguarding employment and maintaining competitiveness.

SME Malaysia expressed its support for the Cabinet's decision to temporarily exempt MSMEs from additional minimum wage increases. This decision was raised by Entrepreneur and Cooperatives Development Minister Steven Sim during a recent Cabinet meeting. Sim emphasized that while workers' wages should continue to rise, local businesses, particularly MSMEs, also require protection due to their struggles with higher operating costs and existing economic challenges.

Instead of raising wages for MSME workers, the government plans to implement alternative measures, such as wage subsidies under the Progressive Wage Policy. These subsidies will be tied to productivity improvements, ensuring that wage increases are directly linked to enhanced efficiency. Dr Chin believes that this temporary exemption will allow businesses to maintain continuity, protect jobs, and remain competitive while still contributing to Malaysia's economic growth.

SME Malaysia supports the government's efforts to improve workers' wages through the Progressive Wage Policy, which provides wage subsidies and links wage growth to productivity gains. To further bolster this initiative, Dr Chin called for stronger wage incentives and subsidies by increasing financial support, expanding coverage, and simplifying the application and approval process.

This will enable more MSMEs to benefit from the program, progressively raise workers' wages, and allow employers to better manage additional costs stemming from wage adjustments.

The association also welcomes the government's continued engagement with the SME community. Dr Chin stressed the need for further dialogue to develop a wage policy framework that balances workers' income growth, business competitiveness, and sustainable economic growth. SME Malaysia will hold a joint press conference with the Malaysia Retail Chain Association (MRCA) on Friday to discuss the minimum wage issue and present findings from its recent SMEAM Quick Business Survey: Minimum Wage Review 2026.

The survey will provide insights into businesses' operating cost pressures, their ability to handle further minimum wage adjustments, and industry perspectives on the government's wage policies and supporting measures. The feedback from businesses will also inform the government's ongoing review and refinement of wage policies, particularly those affecting MSMEs.