SME, retail groups warn minimum wage hike could trigger ‘cascading’ cost increases

The SME Association of Malaysia (SMEAM) and the Malaysia Retail Chain Association (MRCA) have jointly expressed concern over proposed minimum wage hikes. At a joint press conference, SMEAM President Chin Chee Seong revealed that 61.6% of 333 survey respondents, representing various industries, stated their current business conditions are worse or significantly worse than 12 months prior.

Only 6.6% of respondents outright supported the minimum wage increase from RM1,700 to around RM2,000, while 45.9% strongly disagreed, and 21.3% suggested delaying the hike until economic conditions improve.

MRCA President Datuk Liew Bin emphasized that current business conditions are not suitable for a minimum wage increase, warning that the effects will ripple through the entire salary structure. The survey also revealed that 92.8% of respondents anticipate pressure to adjust salaries of existing staff above the new minimum wage, resulting in significantly higher operating costs, lower profit margins, and price increases for products.

Business owners emphasized that wage adjustments should be based on employee productivity, not merely the minimum wage. The associations also presented their "Budget 2027 Wishlist," calling for cumulative cost assessment, life-cycle financing, productivity drives, strategic investment, and an integrated SME Development Gateway.