PETALING JAYA: The Malaysian Employers Federation (MEF) has backed the government decision to spare micro, small and medium enterprises (MSME) from further increase in the RM1,700 minimum wage for now, saying the reprieve would help smaller businesses cope with rising operating costs and mounting competition.
MEF senior adviser for government, media and international engagement Datuk Dr Syed Hussain Syed Husman said the move would give MSME more room to manage rising operating costs while protecting employment opportunities.
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“MEF supports the government decision to give MSME a reprieve from further increase in the RM1,700 minimum wage at this stage.
“This is a responsible and pragmatic approach that recognises the realities faced by smaller businesses while safeguarding employment opportunities.”
However, Syed Hussain said the final decision on the minimum wage review, including the proposed new rate and exemption for MSME, should await the announcement by Prime Minister Datuk Seri Anwar Ibrahim when tabling Budget 2027.
He added that wage subsidies under the Progressive Wage Policy (PWP) could provide an alternative means of increasing worker incomes without immediately raising statutory labour costs across the board.
“The important principle is that wages should rise together with productivity, skills and value creation.”
Syed Hussain said higher labour costs could result in reduced hiring, business contraction, increased automation or business closures if they rose faster than productivity and business capacity.
“Protecting MSME therefore also means protecting jobs.”
The current minimum wage of RM1,700 a month has been fully applicable nationwide since Aug 1, 2025, after a six-month deferment for employers with fewer than five workers ended.
MEF said the focus should now be on raising wages through productivity, skills development, technology adoption and better quality jobs.
It also backed the continued implementation of the PWP, which links wage progression to productivity, skills and workers’ contributions.
Syed Hussain said the government should continue engaging employers and workers through the established tripartite process when reviewing future wage policies.
“For now, MEF believes that it is important for all stakeholders to await the detailed announcement by the prime minister on the minimum wage review and the specific treatment of MSME when Budget 2027 is tabled.”
On Wednesday, Anwar said the government would consider the cost pressures and competitiveness challenges faced by small businesses in the formulation of Budget 2027.
He said the issues were among those raised during a Budget 2027 engagement session with representatives of Bumiputera contractor associations and companies.
“One of the issues raised was the difficulties faced by small businesses across various industries, particularly in dealing with procurement and operating cost pressures arising from the global supply crisis.”
Anwar said the government had taken note of views and suggestions concerning cost pressures, access to opportunities and efforts to strengthen business competitiveness.
He added that the Madani government would ensure Budget 2027 created wider opportunities for the people and businesses to build their capabilities.
Budget 2027 is set to be tabled on Oct 9.
