Implementation of minimum wage: Employers should not transfer the increased operating costs to consumers

The President of the Malaysian Employers Federation (MEF), Datuk Dr Syed Hussain Syed Husman, emphasized that employers should avoid transferring the additional operating costs resulting from the enforcement of the new Minimum Wage Order, which takes effect today, to consumers.

He explained that higher prices for goods and services could lead to increased inflation and weaken market competitiveness.

“Employers can explore various strategies to prevent passing on costs to consumers, such as enhancing operational efficiency, investing in employee skill development, and adopting new technologies to improve business processes.

“However, MEF stresses that this wage increase should be implemented in a balanced manner to ensure that businesses, especially micro, small, and medium enterprises (MSMEs), can adapt without facing excessive financial strain,” he said in a statement today.

With the new wage order taking effect, approximately 4.37 million workers will now receive a minimum salary of RM1,700 per month, an increase from RM1,500 previously.

Syed Hussain urged all employers to comply with the new minimum wage regulations, emphasizing that it will help businesses in Malaysia attract a skilled workforce, boost productivity in production and services, and contribute to the nation’s economic progress.

He also called on the government to continue supporting employers, particularly MSMEs, through financial incentives and training programs to help businesses adjust to the new requirements.

At the same time, MEF pledged to collaborate with all relevant stakeholders, including employees, trade unions, and the government, to ensure a smooth transition and positive economic impact for all parties involved.

He reaffirmed MEF’s strong support for the new minimum wage policy, viewing it as a positive step toward improving workers’ welfare and strengthening the country’s workforce.

“The wage adjustment for employers with five or more employees demonstrates their commitment to fostering a sustainable and inclusive work environment where all employees are valued.

“MEF recognizes that fair and competitive wages are crucial for employee motivation and overall economic growth. They also enhance productivity, maintain competitiveness, and support business sustainability.

“We see the implementation of the RM1,700 minimum wage as an opportunity to improve employee well-being while driving productivity,” he added.

Additionally, he urged government agencies, government-linked companies (GLCs), government-linked investment companies (GLICs), as well as large local and multinational corporations, to immediately review existing contracts to align with the new wage policy.

This review is necessary to ensure service providers can meet their obligations in complying with the RM1,700 minimum wage rate.

“The argument that contracts cannot be revised after being signed is no longer acceptable. All Malaysians must come together to ensure the successful implementation of the new minimum wage.

“Many MSMEs require immediate support and adjustments to transition from the RM1,500 wage to RM1,700 for the remaining duration of ongoing contracts,” he stated.