Hamzah: RM2,000 minimum wage exemption risks creating two-tier workforce

Opposition leader Hamzah Zainudin has expressed concern that a proposed exemption for micro, small and medium enterprises (MSMEs) from a proposed RM2,000 minimum wage could create a two-tier workforce in Malaysia. According to Hamzah, businesses with annual revenues below RM50 million may be unable to match the higher minimum wage, leading to a wage gap between their employees and those in larger companies. This wage disparity could result in workers leaving smaller businesses in favor of better-paying employers.

"An employer may tell his worker, I'm sorry, I cannot raise your salary to RM2,000 because the government has exempted companies earning below RM50 million, and mine falls under that category," Hamzah said during a policy-stage debate on the 2027 Budget in the Dewan Rakyat. The worker may then reply, "In that case, I've already applied elsewhere, and the manager at the fast-food chain next door has told me to come over because they are offering RM2,000."

Smaller businesses would struggle to retain staff if larger firms can afford to pay more, Hamzah warned. The minimum wage increase, set to take effect in June 2027, could also trigger wider wage adjustments as experienced workers seek to maintain pay differentials. If someone who has worked for three years is earning RM2,000 and a new worker also earns RM2,000, the experienced worker may demand a RM300 increase to RM2,300, pushing up operating costs.

Despite the government's aim of raising incomes, Hamzah emphasized that MSMEs should receive targeted assistance to help them manage higher wage costs without disrupting their operations. He urged the government to consider incentives channelled through the Social Security Organisation (Socso) to ensure the stability of MSMEs.