KOTA KINABALU: Both employees and employers should turn to the Sabah Labour Advisory Council to “strike a balance” following the government’s decision to increase the minimum wage to RM1,700.
Sabah PKR chief Datuk Mustapha Sakmud (pic) expressed concerns over how this wage increase, announced in Budget 2025 by Prime Minister Datuk Seri Anwar Ibrahim, would impact small and medium enterprises (SMEs) in the state.
The Deputy High Education Minister, who is also former deputy human resources minister, explained that the increase was necessary due to rising living costs but acknowledged the strain it places on businesses, particularly in Sabah, where the economic environment differs from industrial hubs like Selangor or Penang.
“The wage increase has been reviewed thoroughly, even during my time at the Human Resources Ministry. With the rising costs of goods, RM1,500 is no longer enough for people to manage their daily expenses,” Mustapha said.
He added that the new minimum wage of RM1,700 is meant to cushion the impact of inflation on workers.
However, Mustapha said that many SMEs were struggling with the change, echoing the concerns raised during the previous wage hike to RM1,500.
Recognising Sabah’s unique economic challenges, Mustapha proposed greater flexibility at the state level.
He stressed the role of the Sabah Labour Advisory Council, a body he proposed during his tenure, which has now been established, believing this council is crucial for addressing wage issues tailored to the state's economic realities.
“What I want is for matters like this to be discussed in the Sabah Labour Advisory Council. Perhaps Sabah could have some exemptions from the wage increases.
"This should be carefully reviewed and agreed upon at the state level before being presented to the Human Resources Ministry,” he said.
“While wage increases aim to improve workers' livelihoods, they can also burden businesses, especially in states like Sabah, where business volume and purchasing power are lower compared to more industrialised regions,” he said.
Mustapha also warned of the ripple effect wage increases can have on the prices of goods and services, with businesses likely to raise prices to cover higher operating costs.
Acknowledging the difficulty of striking this balance, he said: “As wages rise, so do prices. In Sabah, where business volumes are small, companies cannot absorb these costs as easily as in bigger states.”
Despite these challenges, he affirmed the government’s commitment to finding a middle ground that benefits both workers and business owners.
“We need to strike a balance. Sabah’s economic conditions are unique, and that’s where the council plays a crucial role,” he added.
With the Sabah Labour Advisory Council now in place, there is hope that more region-specific policies can be developed to ease the burden on businesses while ensuring fair wages for workers.
