MP moots subsidising small firms to pay new minimum wage

The Malaysian government plans to increase the minimum wage from RM1,700 to RM2,000 in June 2027, but small businesses with annual sales under RM50 million will be exempt from this hike. Opposition MP Ahmad Fadhli Shaari has suggested that the government should instead subsidize these micro, small, and medium enterprises (MSMEs) for seven months to ensure their workers receive the new RM2,000 wage.

Fadhli proposed that the government provide a monthly top-up of RM300 per worker, amounting to up to RM150 million per month, or RM1.05 billion over seven months, not including administrative expenses. He argued that exempting smaller companies from the wage increase would result in a disparity between workers' earnings, with those in larger firms earning RM2,000 and those in smaller enterprises still receiving RM1,700.

Fadhli emphasized that this disparity could negatively impact employment opportunities, potentially causing skilled workers to leave smaller businesses for bigger companies, thereby weakening the competitiveness of MSMEs. To fund this subsidy, Fadhli proposed reducing the RM3.8 million allocation for each government MP in 2027, saving RM581.4 million.

The remaining funds could be sourced from other government spending cuts, including the Prime Minister's Department, whose allocation increased from RM10 billion to RM11.6 billion.