MP moots subsidising small firms to pay new minimum wage

The minimum wage in Malaysia is set to increase from RM1,700 to RM2,000 next June, but smaller businesses with annual sales under RM50 million will not be affected by this change. Ahmad Fadhli Shaari, an opposition MP, has suggested that the government should subsidize these small businesses for seven months to help them pay their workers the new wage, rather than exempting them from the increase.

The proposal would initially target 500,000 workers at micro, small and medium enterprises (MSMEs), with the government contributing RM300 per worker. This would cost up to RM150 million per month, or RM1.05 billion over seven months, not including administrative expenses. Fadhli believes that exempting smaller companies from the new minimum wage would result in workers at larger firms earning RM2,000 a month, while those at smaller companies would remain at RM1,700.

This disparity could have negative consequences for employment, as skilled workers might leave smaller businesses for larger ones, making it difficult for MSMEs to retain employees and potentially harming their competitiveness. To fund the subsidy, Fadhli proposed reducing the RM3.8 million allocation for each government MP in 2027, which he claimed would save RM581.4 million.

He suggested that the remaining funds could be sourced from cuts to other government spending, such as the Prime Minister's Department, whose allocation has risen from RM10 billion to RM11.6 billion.