KOTA KINABALU: Sabah employers voiced frustration over the raising of the minimum wage to RM1,700 as announced in last week’s Budget 2025.
Sabah Employers Association (SEA) president Yap Cheen Boon said the salary hike will put further pressure on Sabah businesses, which are already reeling under the Sabah Labour Ordinance (SLO) amendments being passed in Parliament.
He said the wage hike and SLO amendments will cause Sabah’s micro, small and medium businesses to face a staggering over 21% increment in labour costs by February 2025.
“Cascading wage rises for experienced or senior workers in the company, which are necessary to maintain work harmony, will further compound this cost increase,” he said on Monday.
He said setting minimum starting wages for skilled jobs based on West Malaysia standards shows a federal-centric mindset, ignoring 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.
“Overall, businesses will face a tremendous labour cost rise, which is hard to mitigate in a restrictive market in Sabah,” Yap added.
He said the RM200 increment per worker in Sabah will benefit approximately 500,000 salaried workers.
He said this would translate to additional spending power of RM1.2bil per year, which is 1.4% of Sabah’s gross domestic product (GDP).
“Such a gain may be easily negated by a rise in the price of goods and services that will inevitably follow,” he said.
He said the state’s unemployment rate is 8.71%, or 181,500 Sabahans, more than double the national average.
“Up to 33% are either uneducated or primary school leavers, and almost 55% are at the Sijil Pelajaran Malaysia (SPM) level only.
“This relates back to the limited options of businesses facing high labour cost increases – either increase prices and lose customers, close shop, let go of unproductive workers or tighten employment standards to block out low-skilled job seekers.
“This is analogous to ‘punishing the weak’ when it should be the other way around,” he said.
Yap said that of the currently employed within the state, only 18% are in the highly skilled category, for which the demand has been adequately met.
Another 14% of the unemployed are skilled workers ready to fill in jobs when needed, he said.
