THE Malaysian government must establish a clear timeline and action plan for any future wage policy adjustments to help businesses manage rising costs, says the Federation of Malaysian Manufacturers (FMM).
FMM President Tan Sri Soh Thian Lai stressed that predictable and well-communicated policy changes are crucial to reduce financial strain on manufacturers.
“A sufficient timeline is important for the industry to adapt to cost increases and manage company finances effectively,” he said in a recent statement.
He also called for a comprehensive regulatory review aimed at streamlining processes, cutting administrative costs, and improving the ease of doing business in Malaysia.
“FMM believes that achieving sustainable wage growth must be carried out cautiously while maintaining the competitiveness and financial sustainability of manufacturers, particularly in today’s high-cost operating environment,” he added.
Soh noted that the recent rise in the minimum wage had increased operational costs for many companies, especially those in labour-intensive sectors.
“Many manufacturers have had to absorb these additional costs amid an already challenging business environment,” he said.
In response, companies have adopted various cost-mitigation strategies, including investments in automation and digitalisation, restructuring workflows, upskilling workers to boost efficiency, and optimising supply chain management.
When asked whether the higher minimum wage had affected foreign investor perceptions of Malaysia as a competitive manufacturing hub, Soh said there had been no significant change.
“Malaysia is still considered a preferred manufacturing destination in the region, despite the increase in operating costs,” he said.
Meanwhile, researchers have suggested the government make annual reviews of the minimum wage mandatory to ensure pay keeps pace with the cost of living.
Khazanah Research Institute (KRI) researcher Shazrul Ariff Suhaimi told Sinar Harian that such a policy would mirror international practices.
“Currently, the National Wages Consultative Council Act 2011 mandates a review every two years. However, the Act allows for earlier reviews either on the council’s initiative or via government instruction,” he explained.
“One proposal is to mandate annual reviews, as is the practice in some countries, to ensure that minimum wage adjustments reflect rising living costs.”
He pointed to Belgium, France, Luxembourg, and Poland, where statutory minimum wages are automatically indexed to inflation, while in Australia, wage setting is overseen by an independent commission.
Shazrul said the persistent gap between minimum wages and actual living costs was largely due to slow wage growth among lower-income workers.
“From 2010 to 2019, we found that for the bottom 50 per cent of workers, the average annual real wage increase was only RM56 per person,” he said.
He also cited inflation driven by global supply chain disruptions and geopolitical shocks, such as the US-China trade war and recent US tariff announcements, as contributing factors.
“Food inflation has also played a major role in recent years, driven not only by rising prices but also by urbanisation and changing food consumption patterns,” he added.
On the broader impact of the new RM1,700 minimum wage, Shazrul said the increase had been meaningful for low-income earners.
“Each increase in the minimum wage has a significant impact on low-income workers, as wage growth for this group tends to occur primarily in years when the minimum wage is revised.”
He also called for improvements in union coverage and collective bargaining mechanisms to help workers negotiate for fairer wages.
According to the Ministry of Human Resources, employer compliance with the new Minimum Wage Order, effective from 1 February, stood at 99.5 per cent as of March 2025.
Approximately 4.37 million workers have benefited from the RM200 increase from the previous minimum of RM1,500. The ministry also reported that Malaysia’s median monthly wage has now surpassed RM3,000 for the first time.
Despite these improvements, a recent Sinar Ahad survey found that many workers—both urban and rural—continue to struggle with the rising cost of living and are hoping for additional support from the government and employers.
One such initiative is the MADANI Worker’s Card (Kad Pekerja Madani), launched by Prime Minister Datuk Seri Anwar Ibrahim on 1 May. The card offers one million trade union members discounts of up to 30 per cent at over 100 companies supplying essential goods and services. - May 5, 2025
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