KUALA LUMPUR: A proposed RM3,100 minimum wage could discourage entry-level hiring and burden small businesses, the Malaysian Employers Federation (MEF) said.
MEF senior adviser for government, media and international engagement Datuk Dr Syed Hussain Syed Husman said wage decisions must be evidence-based and economically sustainable.
He was responding to the Malaysian Trades Union Congress (MTUC), which said the government's newly announced RM2,000 minimum wage was insufficient compared with its RM3,100 demand.
MTUC secretary-general Kamarul Baharin Mansor said the rate fell short of union targets and the RM3,400 living wage paid by government-linked companies and government-linked investment companies.
Prime Minister Datuk Seri Anwar Ibrahim announced the increase from RM1,700 to RM2,000 when tabling 2027 Budget. The new rate takes effect in June 2027 and is expected to benefit more than four million workers.
Syed Hussain said wage proposals must account for differences in employers' ability to absorb higher costs, particularly among micro, small and medium enterprises.
"What a large corporation can absorb may severely burden a small manufacturer, neighbourhood retailer, family business, small contractor, or thin-margin service provider," he told the New Straits Times.
He said smaller businesses faced higher relative operating costs, tighter financing and weaker bargaining power with suppliers, leaving them less able to absorb sudden increases in payroll costs or invest in automation.
Syed Hussain also cautioned against treating living wage estimates as mandatory minimums across all sectors.
"A living wage estimate is useful for assessing household needs, but imposing it across all sectors without examining regional variations and economic impacts is impractical," he said.
He said wage growth should reflect productivity, job complexity and skills, adding that starting salaries for fresh graduates and semi-skilled workers must align with job value and business performance.
A blanket wage requirement, he said, could distort salary structures and discourage employers from hiring entry-level workers.
Williams Business Consultancy Sdn Bhd founder and director Dr Geoffrey Williams said requiring employers to pay a RM3,100 minimum wage was politically impossible, but achieving that take-home income through government cash top-ups was realistic.
He said the proposed rate would be unviable for many employers, but combining statutory minimum wages with assistance such as Sumbangan Tunai Rahmah and Sumbangan Asas Rahmah could help bridge the gap.
"This gives firms time to adjust while government top-ups bring workers closer to RM3,100. It won't trigger inflation and will boost local economic spending," he said.
Williams also disputed the argument that wage increases must be matched by productivity gains.
"Wages in Malaysia reflect bargaining power, not productivity. If productivity rises, employers simply keep higher profits instead of paying workers more."
© New Straits Times Press (M) Bhd