Minimum wage reprieve will help MSMEs weather rising costs: MEF

KUALA LUMPUR — The Malaysian Employers Federation (MEF) has welcomed the government’s decision to defer any further increase to the current RM1,700 minimum wage for micro, small and medium enterprises (MSMEs).

MEF senior advisor for Government, Media and International Engagement Datuk Dr Syed Hussain Syed Husman said the reprieve would give smaller businesses much-needed breathing space as they contend with rising operating costs and intensifying competition, Bernama reported.

He also commended Entrepreneur and Cooperatives Development Minister Steven Sim for bringing the challenges faced by MSMEs to the Cabinet, particularly the need to preserve their sustainability, competitiveness and ability to retain workers.

“This is a responsible and pragmatic approach which recognises the realities faced by smaller businesses while safeguarding employment opportunities,” he said in a statement today.

Syed Hussain said the final details of the minimum wage review, including the proposed new rate and any specific conditions for MSME exemptions, would only become clear following Prime Minister Datuk Seri Anwar Ibrahim’s announcement during the tabling of Budget 2027.

He said the government’s consideration of alternative measures, including wage subsidies under the Progressive Wage Policy (PWP), could provide a more sustainable way of raising workers’ incomes without immediately increasing statutory labour costs across the board.

“The important principle is that wages should rise together with productivity, skills and value creation,” he said, adding that targeted wage incentives could help MSMEs raise workers’ incomes without placing a disproportionate strain on their operations.

Syed Hussain warned that if labour costs increased faster than productivity and business capacity, MSMEs could face reduced hiring, business contraction, greater pressure to automate or, in some cases, closure.

He said MSMEs remained a vital part of Malaysia’s economy and employment landscape, making their sustainability an important consideration in the formulation of wage policies. – October 1, 2026