PETALING JAYA: The proposed RM2,500 minimum monthly salary for semi-skilled workers and graduates risks creating wage compression, placing additional financial pressure on employers and potentially reducing job opportunities for young Malaysians, say industry players.
SME Malaysia president Dr Chin Chee Seong said while the association supported efforts to improve starting salaries, wage levels must reflect employees’ skills, productivity and employers’ financial capacity.
He said higher starting salaries could increase payroll costs, particularly for SMEs in labour-intensive industries, while prompting existing experienced employees to seek corresponding salary adjustments.
“We support better wages for graduates and skilled workers, but salaries must grow alongside skills and productivity.
“We must not create a situation where higher starting wages unintentionally reduce employment opportunities for young Malaysians.”
Chin warned that employers might respond to the higher costs by reducing graduate recruitment, freezing hiring or prioritising experienced workers over fresh graduates, making it more difficult for young people to enter the workforce.
Chin urged the government to adopt a phased and sector-sensitive approach, supported by targeted wage subsidies, training incentives and productivity improvement programmes to help businesses manage the transition.
Malaysian Employers Federation (MEF) president Nik Mustapha Nik Mohamed said the federation supported efforts to improve starting salaries for semi-skilled workers and graduates with pay reflecting their skills, qualifications and responsibilities.
However, he said the initiative’s implementation must take into account employers’ different financial capabilities, existing wage structures across industries and Malaysia’s competitiveness as an investment and business destination.
“A uniform starting salary could place considerable pressure on smaller employers, particularly those in labour-intensive sectors with tight profit margins and limited capacity to absorb additional costs.”
He added that wage compression could occur when employees with several years of experience or greater responsibilities earned only marginally more than newly recruited graduates or semi-skilled workers.
“This could force employers to review their wider salary structures, creating additional cost pressures beyond the initial increase for new recruits.”
