KUALA LUMPUR (Sept 1): The Malaysian Employers Federation (MEF) has welcomed the government's decision to grant micro, small and medium enterprises (MSMEs) a reprieve from further increases in the current RM1,700 minimum wage, for the time being.
MEF senior advisor for government, media and international engagement Datuk Dr Syed Hussain Syed Husman said the decision provides much-needed breathing space for MSMEs, which continue to face rising operating costs and an increasingly competitive business environment.
He also commended Minister of Entrepreneur and Cooperatives Development Steven Sim for highlighting the challenges faced by MSMEs to the Cabinet, emphasising the need to protect their sustainability, competitiveness, and capacity to sustain employment.
“This is a responsible and pragmatic approach which recognises the realities faced by smaller businesses while safeguarding employment opportunities,” he said in a statement Thursday.
However, Syed Hussain stressed that the final details of the minimum wage review, including the proposed new rate and specific conditions of any exemption for MSMEs, would have to await the official announcement by Prime Minister Datuk Seri Anwar Ibrahim during the tabling of Budget 2027.
He said the government's consideration of alternative mechanisms, including wage subsidies under the Progressive Wage Policy (PWP), provides a more sustainable pathway to improving workers' incomes without imposing an immediate across-the-board increase in statutory labour costs.
“The important principle is that wages should rise together with productivity, skills and value creation,” he said, adding that targeted wage incentives would allow MSMEs to increase incomes without placing a disproportionate burden on their operations.
Syed Hussain said that if labour costs were to rise faster than productivity and business capacity, MSMEs could face consequences such as reduced hiring, business contraction, increased automation pressures, or closures.
He said that MSMEs are a critical component of Malaysia’s economy and employment ecosystem, and their sustainability must remain an important consideration in wage policy.
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