KUALA LUMPUR: The Madani government announced on May 1, 2026 two headline labour-policy commitments at the Labour Day gathering: a path to RM3,000 by 2030 and a new post-maternity leave allowance, Elaun Pasca Cuti Bersalin (EPCB), set at 80 per cent wage replacement for up to 30 days.
Both objectives respond to real and pressing needs, where Malaysian workers do deserve higher wages and working mothers must be provided income protection at one of the most financially exposed moments in their working lives.
What Insap cannot support is the form and policy design in which both announcements were delivered. As announced, they will not reach the workers and women they are meant to help, and in the case of the wage commitment, may cost some of them the very jobs they hold today.
A path from RM1,700 today to RM3,000 by 2030 is the steepest minimum wage trajectory in Malaysia’s history and exceeds every sustained Asean and OECD precedent on the public record. International and Malaysian research is consistent on what follows when wage adjustments outpace what businesses can absorb: the lowest-paid workers lose their jobs first, through automation, informalisation or outright closure of the smaller employers who cannot carry the increase. That is the outcome we are most concerned to prevent.
The state of Malaysian SMEs today is not the state they were in a normal year. Samenta SME Outlook Survey 2025/26, released before the diesel crisis, found that seven in ten Malaysian SMEs hold less than six months of cash reserves. Samenta’s subsequent flash survey last month on the diesel cost shock, alongside concerns raised by other trade associations and employer chambers, has shown the position deteriorating sharply through the seven-week price surge.
Insap’s own research on the diesel crisis points to material inflation pass-through still working its way through the supply chain in the months ahead. To layer the steepest wage trajectory in Malaysia’s history, the new Lindung 24 Jam contribution from June 2026, the e-invoicing Phase 5 milestone on 1 July 2026 and the EPCB amendment on top of that environment is to place the full weight of an ambitious labour reform on the cashflow of employers who are already absorbing a once-in-a-generation cost shock with little direct relief.
The EPCB carries a different but equally serious weakness because the benefit is administered through the Employment Insurance System (EIS) and restricted to EIS-insured private-sector employees. Approximately 1.35 million Malaysian women in informal employment, including self-employed women, gig workers and SKSPS-registered own-account workers, fall completely outside it.
A maternity benefit that misses the single mother running a warong, the e-hailing driver and the home-based seamstress strengthens protection for women who already have it and leaves untouched the women most exposed to income loss when childbirth interrupts work.
There is no visible record of meaningful prior consultation with employers, employer chambers, trade associations, the SME community, the trade union movement or the women’s economic empowerment groups whose constituents these policies most affect.
Insap urges the government to do what good labour policy requires of any administration. Convene proper consultations and engagements with employers, unions and the women’s economic empowerment community.
Workers deserve both higher wages and the jobs to earn them. Mothers deserve income protection that reaches them whether they work in an EIS-insured factory or at a roadside stall. Both deserve a government that designs labour reforms with employers, workers and SMEs at the table, not over them.
Datuk Dr Pamela Yong
Institute of Strategic Analysis & Policy Research (Insap) chairman
The Institute of Strategic Analysis and Policy Research (Insap) is a Malaysian independent non-profit think tank established in 1986 that focuses on political-economic research, public policy analysis, and nation-building.
