KUALA LUMPUR: The government has been urged to emulate Singapore’s wage and foreign worker quota models, which restrict foreign recruitment until companies hit mandatory local hiring benchmarks.
Wee Ka Siong (BN-Ayer Hitam) said adopting such a framework is vital for structuring local salaries according to qualifications and skills to drive sustainable income growth.
“In Singapore, they use a local qualifying salary (LQS) alongside a dependency ratio ceiling (DRC) system governing the ratio of local to foreign worker recruitment.
“As long as the required targets for local workers are not met, companies are not eligible to obtain foreign worker quotas.
“If adapted in Malaysia, this LQS and DRC approach can help differentiate wage standards, and has the potential to increase people’s income,” the MCA president said during the debate on the 2027 budget in the Dewan Rakyat today.
While welcoming the minimum wage hike to RM2,000, Wee cautioned against a potential two-tier labour market.
Micro, small and medium enterprises (MSMEs) with sales turnovers below RM50 million are temporarily exempted, remaining at the RM1,700 rate, when the new minimum wage comes into effect next June.
Wee said paper exemptions will crumble under market realities as skilled talent migrates to corporate players offering higher compensation.
“This is the two-tier workforce I am worried about. Skilled workers will certainly migrate to companies that can pay more.
“In the end, MSMEs will still be forced to raise wages to retain staff even though their profit margins are already thinning,” he said.
Wee pointed to data from the Small and Medium Enterprises Association of Malaysia (Samenta) indicating that seven out of 10 SMEs currently hold less than six months of cash reserves.
He warned that concurrent pressures from soaring labour costs, higher electricity tariffs, and overlapping taxes could trigger widespread business closures.
He said wage growth must be tied to productivity rather than administrative enforcement alone.
“Publish the impact study by the National Wages Consultative Council and set an expiry date for the MSME exemption with at least 12 months' notice.
“Also, grant additional tax deductions to MSMEs that invest in automation and training to raise worker salaries,” he said.