MEF welcomes RM2,000 minimum wage, says MSME exemption gives smaller firms breathing room

On October 9, the Malaysian Employers Federation (MEF) welcomed the decision by the Malaysian government to raise the national minimum wage to RM2,000, beginning in June 2027, while exempting micro, small and medium enterprises (MSMEs) with annual sales under RM50 million. MEF senior adviser Datuk Syed Hussain Syed Husman emphasized the need for a balanced approach to ensure that improving workers' welfare doesn't negatively impact business viability, hiring, or existing jobs.

He highlighted that a transition period and support for MSMEs would help maintain employment and business operations during the wage increase. Syed Hussain stressed that businesses should reward employees based on performance, productivity, skills, and contributions while recognizing that MSMEs have different financial capacities, especially smaller firms with tighter margins and limited resources.

He explained that MSMEs require an exemption to have flexibility in strengthening their financial position and improving productivity without jeopardizing employment. However, Syed Hussain suggested that any exemption must come with clear eligibility criteria, transparent guidelines, and adequate communication about how the RM50 million sales threshold will be assessed, how related companies will be treated, and the application of the exemption to various business structures.

Additionally, he proposed that the government implement complementary measures to support businesses in boosting productivity, adopting digitalisation and automation, offering skills development, and reducing business costs, particularly for MSMEs.