I have no issue with raising minimum wage, but then the customer can’t say to us, “Why are you raising your prices?”
– Tilman J. Fertitta, American billionaire businessman
Datuk Seri Anwar Ibrahim announced a significant policy shift that will affect workers and employers alike: the minimum wage will increase from RM1,500 to RM1,700 per month starting Feb 1, 2025. The Prime Minister’s decision has drawn both praise and concern, given its potential impact on Malaysia’s economic landscape.
While the policy aims to uplift the livelihood of low-wage earners, it also challenges businesses to adjust their operations and adapt to rising labour costs. It is important, therefore, for employers, employees, and the government to shoulder their responsibilities judiciously as we move forward.
The RM200 increase may seem modest on the surface, but for low-income workers, every ringgit counts. The additional income offers not only financial relief but also a sense of dignity and recognition.
Anwar stressed that this policy aligns with the government’s broader effort to ensure the welfare of workers, uplift their dignity and prioritise people-centric policies. Moreover, the Human Resources Ministry has said that the new minimum wage is not intended as a starting salary for skilled workers or graduates, but rather a baseline to prevent exploitation of the most vulnerable in our workforce.
However, the government has sensibly granted a temporary reprieve for small businesses employing fewer than five people. These enterprises, many of which operate on thin margins, are given until Aug 1, 2025 to implement the new wage requirements.
This phased approach demonstrates a pragmatic understanding of the economic pressures faced by micro-enterprises, offering them a buffer to adjust.
While some employers may express concern about increased labour costs, it is worth noting that Malaysia’s new minimum wage still falls short of the rates offered by our regional neighbours. For instance, in Singapore, financial services professionals earn a minimum of S$4,500 (RM14,772) per month, while other sectors offer minimum wages of S$3,500 (RM11,489).
Even mid-skilled workers are entitled to S$2,500 (RM8,200) monthly, and lower-skilled workers in the construction and manufacturing sectors earn between S$1,500 (RM4,900) and S$1,800 (RM5,900).
These comparisons show that the new wage in Malaysia remains competitive for employers while delivering much-needed relief to workers. Employers, therefore, have limited grounds to grumble, especially since these regional figures highlight Malaysia’s relatively modest labour costs.
The new minimum wage should be viewed not as a burden but as an opportunity to invest in human capital, boost employee morale and improve productivity.
No doubt, businesses will need to adjust their strategies to absorb these wage increases. Higher payroll expenses may compel some companies to reallocate budgets, delay certain investments, or cut costs elsewhere.
Small businesses, in particular, will feel the pinch more acutely given their limited resources. However, careful planning and creative budgeting can mitigate these challenges. Companies may need to explore alternative strategies, such as offering non-monetary benefits to attract and retain employees or streamlining operations to enhance efficiency.
Recruitment could also become more competitive. As salary expectations rise, employers may need to go beyond basic compensation packages to attract top talent, possibly by offering flexible work arrangements or career development opportunities.
At the same time, businesses must take steps to retain their existing workforce by aligning current staff salaries with the new minimum wage. Regular reviews of compensation structures will be necessary to prevent staff turnover, which can be both disruptive and costly.
Long-term planning is essential for businesses to integrate these changes into their operations. The wage hike should encourage companies to re-evaluate their business models and explore avenues for growth.
Adjusting pricing models or expanding into new markets are strategies that could not only absorb the increased labour costs but also unlock new opportunities for revenue.
The government’s proactive role in publishing sector-specific starting salary guidelines through the Malaysian Standard Classification of Occupations (Masco) is a welcome development. These guidelines will serve as a critical reference for both employers and employees, ensuring transparency and setting clear expectations.
However, authorities must also take a firm stance against companies that misuse the new wage ceiling to inflate prices unjustifiably. Continuous monitoring is crucial to prevent profiteering practices that could nullify the benefits of the wage increase.
Businesses should not see the higher minimum wage as an excuse to raise the prices of goods and services indiscriminately, burdening consumers and triggering inflation.
While businesses have a responsibility to comply with the new wage policy, employees too must step up and honour their end of the bargain. A higher minimum wage should not be seen as a licence to slack off. Instead, workers must use this opportunity to prove their worth by demonstrating greater responsibility, dedication and professionalism.
The saying, ‘You pay peanuts, you get monkeys’ will no longer apply now; workers will be paid better soon. So, hopefully no more monkey business from our workers!
Employers should not have to deal with absenteeism or frivolous excuses like frequent medical leaves or personal emergencies. Workers should be committed to performing their roles efficiently and conscientiously, thereby justifying the increase in pay.
The wage increment should inspire employees to adopt a positive work ethic and contribute meaningfully to their organisations. Those who deliver subpar work despite being paid fairly will do a disservice not only to their employers but also to the larger workforce, as they risk reinforcing negative stereotypes about labour productivity in Malaysia.
Ultimately, the new minimum wage presents both challenges and opportunities. If managed responsibly, it can become a catalyst for economic progress. Employers can benefit from a more motivated and engaged workforce, while employees gain financial security and the dignity that comes from fair compensation. The key lies in fostering mutual respect and accountability between employers and employees.
The onus is on employees to embrace the spirit of the wage increase by becoming reliable and responsible workers. There is no room for complacency or shirking responsibilities. At the same time, companies must resist the temptation to use the wage hike as an excuse to raise prices and erode consumer confidence.
The government must remain vigilant in tracking errant companies and intervening when necessary to prevent inflationary pressures from spiralling out of control.
The views expressed here are those of the columnist and do not necessarily represent the views of Sarawak Tribune.
