FMM: Minimum wage must balance productivity, living costs

FMM In The News: THE MALAYSIAN RESERVE, September 28, 2026

MINIMUM wage policies must balance productivity gains, living costs and employers’ capacity to pay to ensure wage increases remain sustainable.

The Federation of Malaysian Manufacturing (FMM) said it was responding to Prime Minister Datuk Seri Anwar Ibrahim’s concern that workers should benefit when companies achieve higher productivity and strong profits. 

FMM president Jacob Lee Chor Kok said wage growth should be linked to workers’ skills, output and company performance to ensure sustainability across industries.

“Official SME Corp figures show that micro, small and medium enterprises (MSMEs) accounted for 96.1% of business establishments in 2024.

“Many larger firms already pay above the statutory minimum wage, while smaller manufacturers and labour-intensive businesses generally have less room to absorb a sudden increase in payroll costs,” he said in a statement today.

Lee also warned that a steep, uniform wage hike could trigger broader salary adjustments across all levels, raising overall business costs.

Wage setting should be decided through the National Wages Consultative Council’s tripartite process.

Manufacturers are facing rising production and input costs as well as weaker domestic and export demand, while their capacity to sustain higher payroll commitments varies across companies and industries.

FMM said Budget 2027 could help businesses build the capacity to pay better wages, proposing a more competitive tax framework for qualifying SMEs and reforms to reduce embedded taxes and improve refunds.

It also proposed a RM1.5 billion Smart Manufacturing Support Package for 2027–2030 covering automation, manufacturing digitalisation and artificial intelligence adoption, alongside industry-led training and apprenticeships, measures to ease energy costs and efforts to strengthen supply-chain resilience.

He cautioned that a minimum wage increase exceeding a company’s capacity to absorb it could lead manufacturers to review prices, postpone hiring or change their production plans.

“Firms with strong and sustained performance should reward their employees fairly, while other businesses need the means to improve productivity and grow.

“A fair and sustainable outcome will support better wages, continued investment and opportunities for Malaysians to enter, remain and advance in manufacturing employment.”

Source of article: themalaysianreserve.com