KOTA KINABALU: Sabah employers are frustrated by the imminent RM1,700 minimum wage announced in last week’s Budget 2025.
Sabah Employers Association (SEA) president Yap Cheen Boon said that the salary hike will further strain Sabah businesses already reeling from the Sabah Labour Ordinance (SLO) amendments passed in the current Parliament session.
He said the wage hike taking effect Feb 1, 2025 and SLO amendments will lead to more than 21% labour cost increases across the board for Sabah’s micro, small and medium businesses.
“This cost increase will be further compounded with cascading wage rises for experienced or senior workers in the company which are necessitated to maintain work harmony,” he said in a statement on Monday (Oct 21).
He contended that setting minimum starting wages for skilled jobs based on Peninsular Malaysia standards shows a federal-centric mindset that ignores Sabah's flailing situation.
“This will only exacerbate the unwillingness of struggling Sabah firms to hire unemployed skilled workers at the risk of ballooning labour costs.
“Businesses will face tremendous labour cost rises which is hard to mitigate in a restrictive market in Sabah.
“SEA does not believe that the logic for increasing the minimum wage is effectively sound in the context of Sabah. It is time for the state government to take a more active stand and engage with local stakeholders, and not passively leave to federal dictations,” Yap said.
On Sunday (Oct 20), Sabah United Chinese Chambers of Commerce (SUCCC) president Datuk Michael Lui said while the overall Budget 2025 is in line with the Madani economic framework, the raising of the minimum wage next year was a hasty move.
Lui said it would impact the business community when compounded with the Progressive Wage Policy that will be enforced next year.
When tabling Budget 2025 last Friday (Oct 18), Prime Minister Datuk Seri Anwar Ibrahim announced that the minimum wage would be increased to RM1,700 from RM1,500 per month effective Feb 1.
Employers with fewer than five employees would have until Aug 1 to implement the new minimum wage.
Yap explained that a RM200 increment per worker in Sabah will benefit approximately 500,000 salaried workers.
He said this will translate to an additional spending power of RM1.2bil per year, which is 1.4% of Sabah’s gross domestic product (GDP).
“Such gain may be easily negated by goods and services price rises that will inevitably follow.
“While this economic cost-benefit analysis will lead to argument no end, SEA certainly does not see an end to the unemployment problem within the state, which is currently hovering at 8.71%, or 181,500 Sabahans, more than double the nation's average,” he said.
Yap said the state's high unemployment rate was caused by a gradual decrease in the number of businesses, hence employers, in the state, and an over-abundance of low-skilled workers.
“Up to 33% are either uneducated or primary school leavers and almost 55% are Sijil Pelajaran Malaysia (SPM) level only.
