KUALA LUMPUR: Businesses should not be left to shoulder the cost of higher wages alone, says Entrepreneur Development and Cooperatives Minister Steven Sim.
He said the Government should help businesses, particularly small and medium enterprises (SMEs), improve efficiency and even receive wage subsidies so they could afford to pay workers more.
Malaysia needed higher wages to attract and retain talent, he said, but warned that legislating higher pay without considering the ability of businesses to cope could have consequences.
“If we push the market beyond its capacity, businesses may go out of business,” he said at the EY Entrepreneur Of The Year 2026 Malaysia Top Nominees announcement on Sunday.
Sim said wage increases should go hand in hand with improvements in productivity.
“If wages rise without productivity gains, businesses will eventually pass the higher costs on to consumers, and that leads to inflation.
“But if productivity rises and wages do not follow, then we will lose talent,” he said.
Sim said the Government could help businesses improve productivity through incentives for technology and digitalisation, workforce training and wage subsidies.
“The Government should step in to encourage and reward businesses that are prepared to improve productivity, strengthen training and invest in technology and digitalisation, including through wage subsidies,” he said.
He cited the Progressive Wage Policy introduced when he was Human Resources Minister as an example of the Government and employers sharing the cost of raising wages.
Under the policy, participating employers voluntarily raised salaries while the Government subsidised part of the increase.
Sim said businesses had to remain profitable, but workers should share in the gains when their employers performed well.
