Kota Kinabalu: The Sabah Employers Association (SEA) has urged the State Government to engage with the Federal Government without delay over the proposed RM2,500 minimum monthly wage for graduates and semi-skilled workers, warning that the measure could place significant financial pressure on Sabah businesses.
SEA President Yap Cheen Boon said the minimum wage announcements under Budget 2027 had raised questions over their scope, implementation and potential impact on employers in the State.
He said two schemes had been announced, with a RM2,000 minimum wage for employees of small and medium enterprises (SMEs) with annual turnover exceeding RM50 million taking effect from June 1, 2027, while a RM2,500 minimum monthly salary was proposed for graduates and semi-skilled workers.
Yap noted that although many Sabah SMEs might be relieved that they did not meet the RM50 million annual turnover threshold, the second scheme could expose businesses to a much larger wage increase, depending on how “semi-skilled” workers were defined.
He said Sabah had about 1.9 million employed people, of whom 317,000 would qualify for the RM2,500 minimum if eligibility were restricted to diploma and degree holders, but as many as 1.4 million workers, or nearly 78pc of the workforce, could be covered if the definition followed the official Malaysian Standard Classification of Occupations (Masco) classification commonly used by Federal Government agencies.
Yap said the Human Resources Ministry (Kesuma) was expected to announce the RM2,500 wage guideline for graduates and semi-skilled workers soon, raising concerns if the decision were made without consulting states with different levels of development.
“If the Masco classification is adopted, the proposed wage would effectively mean that Sabah employers are spared the RM300 increase to RM2,000, only to face a much larger RM800 increase to RM2,500 with immediate effect,” he said, Tuesday.
He warned that the RM2,000 wage arrangement could also be revised in Budget 2028, potentially through a lower exemption threshold, while failure to clarify the policy could disrupt the labour market as workers moved from lower-paying SMEs to higher-paying ones.
Such disruption could affect Sabah’s overall economic activity, he said, noting that the State contributed only five per cent of the country’s gross domestic product and continued to record the nation’s lowest productivity.
Yap urged the State Government to ensure that the definition of semi-skilled workers reflected Sabah’s actual economic conditions rather than being determined solely by reference to the more advanced circumstances of Peninsular Malaysia.
He said failure to address the issue could place more than 34,000 employers in Sabah under severe cost pressure and further undermine job opportunities for the State’s 100,000 unemployed people.
SEA also called on the State Government to take a more proactive approach to providing a sustainable operating environment for existing businesses and ensuring that Sabah remained conducive to future investment.
Yap said the association was concerned by what it described as an unsatisfactory record of engagement and policy implementation, including the Sabah Labour Advisory Council not having convened a meeting since its inauguration in May 2025.
He also cited amendments to the Sabah Labour Ordinance, including the Housing Act, which he said had been implemented without adequately considering Sabah’s capacity to comply, as well as the requirement for Sabah employers to use an online registration system that employers in other states were not required to follow.
“If Sabah businesses are left to face the minimum wage issue without adequate support and consultation, many will find it increasingly difficult to sustain their operations, putting at risk the State’s much-touted economic prospects,” he said.
