Employers in Malaysia not ready for new minimum wage

Although the country increased the national minimum wage to RM1,500 (US$334) from May 1, compliance by businesses remains low.
By: | August 31, 2022
Topics: Compensation and Benefits | Compliance | Malaysia | News

In a survey by the Malaysian Employers Federation (MEF), 67.2% of the companies involved are not ready to implement the new minimum wage, which had been increased from the previous rate of RM1,200 (US$267). 

Under the new regulations, employers with five or more workers must increase their workers’ minimum wage from either RM1,100 (US$245) or RM1,200 (US$267) to RM1,500 (US$334). 

Companies with fewer than five workers have until December 31 to implement the change. 

MEF president Datuk Dr Syed Hussain Syed Husman said the new policy resulted in extra costs of between 25% and 35% to businesses, “which is a lot of financial pressure”. 

A previous survey by the MEF on the impact of the increased minimum wage showed that 77.4% of the companies did not want to pay higher wages. 

The bulk of the respondent companies wanted wages to be based on performance and productivity, with about half of them saying that the higher minimum wage would disrupt economic recovery efforts. 

Syed Hussain said 55.7% did not want to absorb the increased costs involved. 

“A total of 64.7% of the respondents indicated that they would pass the cost increase partially to customers, with 35.3% saying they will pass the cost fully to consumers,” he said. 

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He said cash flow was the major issue faced by mainly MSMEs (micro and small and medium enterprises) on implementing the new minimum wage, with most government initiatives to assist MSMEs to sustain their business having ended or are ending soon.