PETALING JAYA: The increase in the minimum wage to RM1,700 from Feb 1 next year is expected to disrupt the operations of small and medium enterprises (SMEs), according to the Small and Medium Enterprises Association of Malaysia (Samenta).
Its president, Datuk Willian Ng, said foreign workers would benefit most from the revised minimum wage of RM1,700.
He also said that the move would disadvantage those in the B40 group, many of whom are semi-skilled and would be among the first to be laid off.
He said SMEs in Sabah and Sarawak would be the most affected, and substantial job loss could be expected.
He said that in urban areas such as the Klang Valley, southern Johor, and Penang, the median wages are much higher than the new minimum wage of RM1,700.
Ng said that apart from the loss of employment, the M40 group could see further wage compression.
"We agree that wages in Malaysia are too low and more must be done to lift the wages of Malaysians. However, this announcement came when the margin for SMEs is compressed.
“This can be disruptive to the operations of the industry. We urge the government to maintain the current minimum wage in lesser developed states or do away with the new upcoming minimum wage," Ng said.
He said it was not simple for SMEs to resort to automation as many multinational enterprises (MNE) outsource their most labour-intensive work to SMEs, including tasks such as cleaning, maintenance, packing and logistics.
Ng said over 80% of SMEs are in the service sector, including the food and beverage and retail industries.
"Digitalisation may reduce the need for workers, but it cannot substitute workers in such industries," he said.
Ng also urged the government to abolish the proposed 2% tax on taxable dividend income above RM100,000, as it would also affect SME owners and amount to double taxation.
"Many SME owners do not draw salaries due to the tight cash flow they have experienced in recent years. Taxing them on dividends derived from a taxed income is a form of double taxation and will discourage SMEs from growing their businesses and turning in higher profits," he said.
At the same time, Ng commended Prime Minister Datuk Seri Anwar Ibrahim for lowering the budget deficit, introducing measures to reduce wastage and extending subsidised funding for SMEs, including allocations to support women and youth entrepreneurs.
He said Samenta was also thankful for TalentCorp's matching grant for industrial training, which would allow more youth to gain practical experience and ease the talent crunch among SMEs.
Meanwhile, Malaysian Council of International Trade Union Network (UNI-MLC) president Datuk Mohamed Shafie BP Mammal said the minimum wage revision reflects the government’s ongoing commitment to raising citizens' incomes, which is essential for improving their quality of life.
He called for stricter enforcement measures to ensure the policy is effectively implemented and urged employers to embrace this increase positively, viewing it as an effort to enhance workers' dignity.
"We understand that employers operate businesses for profit, but they should also share a portion of that profit with their employees," he said.
