PETALING JAYA: The exemption of micro, small and medium enterprises (MSMEs) from the proposed new minimum wage increase will provide much-needed financial relief to about 1.3 million businesses facing rising operating costs, says the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).
Its president Datuk Ng Yih Pyng said the exemption would provide timely relief to MSMEs, which had already faced multiple cost increases over the past two years amid a challenging business environment and growing competition from foreign businesses.
“The exemption will provide a timely and much-needed financial relief to about 1.3 million MSMEs, which have already been inundated with multiple cost increases in the past two years amid a challenging business environment and rising competition from foreign businesses,” he said on Wednesday (Sept 30).
Ng said an appropriate minimum wage level must balance improving workers' incomes with the operational survival of MSMEs.
“A one-size-fits-all approach to minimum wage hikes often risks forcing small businesses to reduce staff or close down,” he said.
He said wage increases should instead be linked to productivity and performance, sector-specific financial capacity, as well as broader economic and business conditions.
“Hence, linking wage increases to productivity and performance, sector-specific financial capacity, and broader economic and business conditions offer a sustainable path forward,” he said.
Ng said ACCCIM supported a productivity-linked wage system, where workers' pay is tied to their output, performance or company profits.
“For employees, it rewards productivity-driven performance, boosts their income growing with the company’s profitability, and improves overall quality of life,” he said.
He said the system would also motivate staff, improve business competitiveness and align labour costs with actual company revenue.
The chamber also welcomed the Government's decision to consider other approaches to increase wages among MSME employees, including wage subsidies under the Progressive Wage System (PWS).
The PWS, a voluntary incentive-based programme, is designed to raise workers' salaries in line with productivity and skills training.
ACCCIM said the programme had benefited 51,363 workers, exceeding its initial target of 50,000, with more than RM73mil disbursed. Of this, about RM10.2mil went to entry-level workers and RM62.9mil to non-entry-level workers.
Ng also proposed that the Government consider a tiered regional minimum wage system instead of a uniform national policy.
“A uniform national minimum wage cannot be one-size-fits-all. It needs to consider regional cost of living differences, socio-economic factors, economic and business development of different states,” he said.
He said the cost of living, prices of goods and services, and labour market conditions could differ substantially between states and regions.
“A tiered approach, with minimum wages calibrated to regional cost-of-living differences, is a potential solution to better support livelihoods without unduly burdening businesses in economically weaker regions,” he said.
Earlier, the Cabinet agreed that workers’ wages should continue to increase, but micro, small and medium enterprises will be exempted from the new minimum wage increase for the time being.
Entrepreneur Development and Cooperatives Minister Steven Sim said the decision took into account the operating cost pressures and current economic challenges faced by local businesses, particularly MSMEs.
