A story broke yesterday, on multiple news outlets like Free Malaysia Today (FMT), that the Malaysian Trades Union Congress (MTUC) - which was established in 1949 and remains the oldest National Centre representing Malaysian workers (as per their website) - was proposing RM3,100/month as the new minimum wage. This is an excellent policy proposal which would help the working class in Malaysia mitigate the rising cost of living. In this article, I will be laying out the economic reasons, the counter-arguments and the rebuttals before concluding.
Economic Reasons
There are plenty of economic reasons in support of this proposal.
For starters, the proposal has the backing of two economists - as reported by the New Straits Times: Universiti Teknologi MARA senior lecturer Dr Mohamad Idham Md Razak and UniKL Business School economist Associate Professor Dr Aimi Zulhazmi Abdul Rashid. Dr Razak mentioned that RM3,100 should serve as a minimum reference point to enable workers to meet basic needs and enjoy a more dignified standard of living, while Dr Aimi mentioned that RM3,100 was "not a luxurious amount", but represented a basic calculation for rent, food, transport, children's expenses and modest savings in cities such as Kuala Lumpur, Selangor and Penang. Dr Aimi also proposed a policy mechanism for future minimum wage growth - which would trend with inflation and increased productivity in order to prevent the erosion of wages every year.
This policy mechanism is not revolutionary; Spain has implemented it - with the Ministry of Labour consulting with major trade unions and business associations [to varying degrees of influence] while also factoring in the Consumer Price Index (CPI), National Productivity, Labour Share and the General Economic Climate before the Government implements it on New Year's Day every year - as is outlined by Eurofound.
The second reason would be the fact that more people get to file their taxes. As mentioned on the Employees' Provident Fund (EPF) website, one is required to submit an income tax return if formally employed people have an annual income that exceeds RM37,333 [or about RM3,111/month] after mandatory EPF contributions. From a Government Point of View, improving the minimum wage to RM3,100/month - without raising the filing threshold brings all employees - who make up 75% of the 16.83 million employed persons (according to the latest DOSM statistics: June 2026) - into the tax net. Currently, only a fraction of Malaysia's total workforce pays personal income tax, with the Economy Minister saying only about 15% of Malaysia's workforce pays income tax. After implementing a RM3,100/month minimum wage, this pushes more citizens above the minimum threshold and increases the pool of registered and active tax filers. This means that year on year, as wages increase due to bonuses and annual increments, more and more working people would be paying tax - widening the tax base, meaning curbing the need to implement regressive taxation like SST and GST, which are forms of regressive taxation that I have denounced in the past in my article entitled: Economic Justice or Band-Aid Solution? A Progressive Take on the SST.
The third reason - and the last reason I will give for my support in this issue is the idea of boosting the local economy. In the latest OpenDOSM data, year-on-year real GDP growth hit 6.0% in Q2 of 2026 - which shows strong growth, but it may not be reflective of the entire country as a whole. The effects of GDP growth - just like wealth - can be concentrated in a small group of individuals or a land area that may not be reflective of the economic realities of the local area. Therefore, in a local area where the wage is lower, a wage boost for some individuals would allow them to spend money in the local area, thereby boosting the local economy and stimulating local industries. A stronger economy in society, where everyone has the ability to participate - is a stronger society. A stronger society will beget a more cohesive nation, where everyone can afford what they need to survive and where we can strive to do better as one nation.
Arguments and Counter-Arguments
Argument #1: The wage floor would jump 82.4% in one move, which employer groups call unprecedented and unsustainable
The most immediate pushback has come from the Federation of Malaysian Manufacturers (FMM). FMM president Jacob Lee Chor Kok argued that the proposed RM3,100 minimum wage would represent an 82.4% increase from the current RM1,700 rate, which he blasted as detached from prevailing economic realities - as reported in the Malay Mail. He further argued that statutory minimum wage revisions since 2013 have always been gradual, rising incrementally from RM900 and RM800 in 2013 to RM1,700 in 2025. With enterprises still adapting to the latest rate, the federation cautioned that raising the baseline to RM3,100 would place it uncomfortably close to Malaysia's formal sector median wage of RM3,167 recorded in December 2025.
Rebuttal: This argument treats the previous, smaller increments as the correct baseline pace, but those increments were set before the current cost-of-living pressures fully materialised, which means they are not evidence that a larger jump is unaffordable, only that it would be unfamiliar. A large one-off correction paired with the policy mechanism proposed by Dr Aimi, which is modelled after Spain’s policy, can have the optics that there will be one large reset followed by predictable, smaller annual adjustments, which gives businesses stability and a path forward rather than instability with repeated large shocks every review cycle.
Argument #2: Employer groups say a blanket, nationwide rate could disproportionately hurt SMEs, rural businesses and micro-enterprises.
Free Malaysia Today (FMT) reported SAMENTA President William Ng said an across-the-board wage increase would significantly squeeze SMEs' profit margins. Ng said that in the medium term, businesses would be forced to pass the cost of the wage increase on to consumers. This would fuel inflation, counteracting the government's efforts to mitigate it. Separately, the Malaysian Employers Federation (MEF) said that while it fully supports raising workers' incomes, such increases must be sustainable; a wage employers cannot afford will ultimately threaten the very jobs it's meant to protect, and called instead for a productivity-driven wage system where higher productivity translates into higher, more sustainable wages.
Rebuttal: Squeezing wages to protect SME margins creates a paradox of low consumption. Low-income members (B40) earners spend almost 100% of their income immediately on basic goods, services, and local retail, which is exactly the market micro-enterprises and local SMEs rely on. Employers who are advocating waiting for productivity to increase before raising wages are actively advocating against boosting labour productivity. Empirical research on Malaysia's past minimum wage orders shows that higher statutory pay floors actually forced firms to boost labour productivity, as shown via a research paper entitled: "Productivity effect of minimum wage in the manufacturing sector of Malaysia" in the Asian Journal of Economic Modelling.
Argument #3: How many companies do you think record profits? Every other business is closing down today.
An Instagram Comment responded to my comment denouncing the FMM statement with the question above, written in the best possible English as I could possibly decipher.
Rebuttal: The latest Business Demography statistics, released by DOSM, which detail business demographics in 2024, reported that 69.9% of businesses launched locally in recent years remain active and operational in a five-year period. This period hasn't particularly been kind to businesses due to COVID, and yet more than 50% of businesses established in 2019 were still around in 2024. In addition, Bursa Malaysia records profits each year, led by major financial and industrial cornerstones. Among large-cap firms, top profit-generators include Malayan Banking Berhad (Maybank), CIMB Group, Public Bank, and Tenaga Nasional Berhad (TNB), which routinely post billions in net earnings.
This clearly shows that employers are not serious when it comes to improving working conditions - especially for the most vulnerable in society. All three arguments are cut from the same neoliberal cloth whereby corporations are more interested in protecting their bottom line, rather than improving working class conditions - and this is further proof why organisation in the workspace (in the form of unions) is very important in protecting the interests of the proletariat.
Conclusion
I leave readers with the concluding words from a famous pro-union song: "Which Side Are You On?"
"Don't scab for the bosses
Don't listen to their lies
Us poor folks haven't got a chance
Unless we organize
Which side are you on?
Which side are you on?
Which side are you on?
Which side are you on?"
Timothy (timothytanyeantim@gmail.com) is a content creator under the Newswav Creator programme, where you get to express yourself, be a citizen journalist, and at the same time monetize your content & reach millions of users on Newswav. Log in to creator.newswav.com and become a Newswav Creator now!
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