MEF warns RM3,100 minimum wage could hurt small businesses

The Malaysian Employers Federation (MEF) has warned that a proposed RM3,100 minimum wage could negatively impact small businesses and discourage entry-level hiring. MEF senior adviser Datuk Dr Syed Hussain Syed Husman emphasized that wage decisions should be evidence-based and economically sustainable. This response came in light of the Malaysian Trades Union Congress (MTUC) stating that the government's new RM2,000 minimum wage was insufficient, as it fell short of their RM3,100 demand and the RM3,400 living wage paid by government-linked companies.

Prime Minister Anwar Ibrahim announced the RM2,000 increase, set to take effect in June 2027, benefiting more than four million workers. Syed Hussain cautioned that wage proposals must consider the varying capacities of employers, particularly micro, small, and medium enterprises, which may face higher relative costs and weaker bargaining power.

He also cautioned against treating living wage estimates as mandatory minimums across all sectors, as this would be impractical and distort salary structures. Williams Business Consultancy Sdn Bhd founder Dr Geoffrey Williams added that a RM3,100 minimum wage was politically unfeasible, but could be achieved through government assistance, which would help workers bridge the gap without triggering inflation.