PETALING JAYA: Companies will be able to manage the effects of a higher minimum wage in Malaysia, but at varying degrees.
The impact will also differ for companies across different sectors, said researchers.
The notion of increasing the minimum wage beyond RM1,700 during the upcoming Budget 2027 was floated as the government was reportedly unhappy with the current wage levels, despite better productivity and stronger profits for some firms.
“Prime Minister Datuk Seri Anwar Ibrahim has said stronger measures to address this issue will be a priority in Budget 2027,” Kenanga Research said in a report.
Mercury Securities head of research Ahmad Ramzani Ramli said security and cleaning services firms will face the greatest pressures should the minimum wage go up, due to the sheer number of their workforce and fixed-price contracts.
He said restaurants and hotels will also be largely exposed because a higher payroll will be difficult to pass on with impacting demand. Moreover, plantation, rubber gloves, textiles, furniture and food processing would face higher production costs, particularly where many workers earn near the wage floor.
“Construction firms could see costs rise through direct labour and subcontractors, especially on projects priced before the increase. Retailers and logistics will be impacted from higher staffing costs,” he told StarBiz.
Ahmad said a hypothetical rise from RM1,700 to RM1,900 would add RM2.4mil a year in basic wages for a company with 1,000 affected employees, before employer contributions, overtime effects or adjustments for supervisors.
However he also maintained that as of yesterday, the statutory minimum wage remains the same, and the government’s pre-Budget statement identifies higher incomes as a priority but does not specify another minimum-wage increase.
Separately, Malacca Securities head of research Loui Low Ley Yee said he agrees that greater pressure is more likely to hit smaller and more labour-intensive businesses where workers are still earning the minimum wage of RM1,700.
According to Loui, in contrast, many of the larger companies are already paying entry-level employees above RM1,700.
“For these companies, the direct impact of a higher wage floor may therefore be relatively manageable, particularly where margins, productivity and pricing power are stronger,” he said.
As for the RM3,100 living wage benchmark that a number of government-linked firms and government-linked investment companies have voluntarily implemented, Loui said this increase might be a tough thing for smaller companies to do.
“This could translate into margin pressure, higher selling prices, slower hiring or greater adoption of automation. The most exposed sectors would generally be those with a high proportion of lower-wage workers, including parts of retail, food and beverage, hospitality, manufacturing, construction, agriculture and outsourced services.” Loui opined that the focus should be on improving productivity via automation, upskilling, better workforce utilisation and better efficiency rather than cost-cutting.
“The key consideration is the pace of adjustment and whether wage growth is accompanied by productivity improvements. Higher wages can support household incomes and consumption, but if the increase is too sharp relative to productivity growth, small and medium enterprises and lower-margin businesses could face greater cost pressure.”
Meanwhile, Kenanga Research said the bigger listed companies have already eclipsed the median wage for 2025 – placing it above the 5.3% at about 6%. It reckoned the most insulated firms include Nestle (Malaysia) Bhd, Padini Holdings Bhd
and 99 Speed Mart Retail Holdings Bhd.
Analysing the RM100 cost increase from the angle of employee mix, Kenanga Research noted it involved about 20% to 40% of employees at the companies it covers.
“Nestle, Padini and 99 Speed Mart are the exception at the lower end of the spectrum, where all staff are at more than minimum, blunting any impact of higher wages.”
Kenanga Research also said glovemakers have previously passed the hike in costs. “We expect Kossan Rubber Industries Bhd to be the least impacted, while Top Glove Corp Bhd will experience a larger impact.”
