KOTA KINABALU: Increases in Malaysia’s minimum wage and average income should not focus solely on figures but also consider differences in economic development and local conditions, says a Sabah assemblyman.
Parti Warisan's Tanjong Papat representative Alex Thien (pic) said increasing income is among the country's priorities, but factors such as economic development in different states, business operating environments and industry characteristics, especially between Peninsular Malaysia and the Bornean states, should be taken into account.
"The government should also consider productivity and the actual capacity of businesses to absorb higher labour costs, particularly given the structural economic differences between Sabah and the peninsula," he said on Friday (Oct 2).
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He said the economic scale, purchasing power, business ecosystem and market conditions in major cities in Peninsular Malaysia were not directly comparable to those in Sabah.
Thien said many micro, small and medium-sized enterprises (MSMEs) in Sabah were already facing multiple pressures, including rising operating and labour costs as well as limited market size.
"Therefore, before implementing a nationwide increase in the minimum wage, the government must carefully assess its potential impact on Sabah’s economy," he said, adding that any increase must be gradual, data-driven and done in tandem with productivity growth.
He pointed out that one of Sabah’s major employment sectors is the oil palm and plantation industry, where income is closely linked to international palm oil prices, over which plantation operators have no control.
Thien said that if wages and other statutory employment costs continued to rise while operators could not correspondingly increase the selling price of their products, their profit margins would come under greater pressure.
Smaller plantations, particularly those with older trees, lower yields or high replanting costs, could even face losses and difficulty in continuing to operate, he added.
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"If businesses are unable to remain financially viable, even the highest minimum wage cannot create sustainable employment opportunities.
"Therefore, protecting workers while ensuring that businesses can continue operating are actually two sides of the same issue," he stressed.
Thien said that if the Federal Government were to further raise the minimum wage, it should provide Sabah with greater policy flexibility in terms of business transformation support and implementation timelines, while ensuring that workers’ incomes would not be overlooked because of regional differences.
He also proposed that Bank Negara Malaysia, the Statistics Department, the Human Resources Ministry and independent research institutions conduct a comprehensive economic impact study on minimum wage adjustments.
"Our goal should not simply be to make the figure on a payslip bigger, but to ensure that people have greater purchasing power, businesses can continue to survive and grow, and Sabah can create more and better employment opportunities," he said.
