MEF warns sharp minimum wage hike could threaten jobs, business sustainability
PETALING JAYA: Malaysia’s review of the RM1,700 minimum wage should not automatically result in an increase, with the Malaysian Employers Federation warning that a sharp rise could threaten jobs and business sustainability.
MEF president Datuk Dr Syed Hussain Syed Husman said the review was reasonable, but any decision on a new rate must be guided by economic and labourmarket data rather than political or short-term pressure.
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“The review should first determine whether the existing RM1,700 rate remains appropriate in light of current economic and labour-market conditions.
“The review should proceed, but the outcome must be determined by data rather than political or short-term pressures,” he said.
His comments followed Human Resources Minister Datuk Seri R. Ramanan’s announcement that the government was reviewing the RM1,700 minimum wage, with the National Wages Consultative Council to determine whether the rate should be maintained or increased.
Ramanan said the review would consider indicators including the poverty line, median wages, inflation, labour productivity and unemployment.
Syed Hussain said the government must balance workers’ rising cost of living against the ability of businesses, particularly micro, small and medium enterprises and labourintensive industries, to absorb higher labour costs.
“Malaysia should avoid making wage decisions based solely on cost-of-living pressures without considering the ability of businesses to absorb higher labour costs and the potential impact on employment,” he said.
He warned that a significant increase could trigger a chain reaction among businesses, including higher prices, reduced hiring, increased automation, job restructuring and shorter working hours.
Syed Hussain said productivity was particularly important, as wage growth that significantly outpaced productivity could increase labour costs without a corresponding rise in output.
“This can affect competitiveness, investment and employment,” he said.
He also cautioned against treating large corporations and smaller businesses as though they had the same capacity to absorb higher wages.
“A uniform increase that is manageable for a large corporation may be extremely difficult for a small business operating on thin margins,” he said.
The impact on younger and lower-skilled workers must also be considered, particularly as Malaysia was already experiencing slower growth in new job creation, he added.
Syed Hussain warned that setting the statutory wage floor too high could have the unintended effect of driving some businesses away from formal employment.
“If the statutory minimum wage is set significantly above what some businesses can sustainably afford, there is a risk that some employers may reduce formal employment, outsource work or move towards informal arrangements.
“That would undermine the objectives of decent work and labour protection,” he said.
Rather than repeatedly debating a new minimum wage figure, Syed Hussain said Malaysia should establish a more predictable mechanism for adjusting the wage floor.
He proposed an agreed formula based on objective indicators, which would give employers greater certainty when planning wages, investments and workforce requirements.
“Malaysia should move beyond the recurring debate of ‘What should the minimum wage be?’ towards the more fundamental question of ‘How do we sustainably raise wages?’” he said.
He also cited Statistics Department data showing that the median monthly wage of Malaysian formal sector employees stood at RM3,064 in March 2026.
This demonstrated that the minimum wage served as a statutory floor rather than the prevailing wage for most formalsector employees.
