KUALA LUMPUR: Employers in three states have said they were not ready to implement the minimum wage of RM1,700 announced during the tabling of the 2025 Budget last week.
In a report by Utusan Malaysia today, employers in Perlis, Kelantan and Sabah said their slow economic growth and a business ecosystem that was not yet strong did not allow them to absorb the RM200 increase.
Employers and businesses in the Perlis and Kelantan said they were expected to be affected by the new policy as the states were small and the cost of living was low, while in Sabah, the cost of raw materials was a lot higher than in Peninsular Malaysia.
Perlis Chinese Chamber of Commerce chairman Koay Chee Khoon said implementing the new minimum wage in bigger cities would not be a problem as the usual salary range for workers was between RM2,000 and RM3,000 monthly.
He said most workers in these cities were also university graduates compared with other states whose employees across various sectors were only Sijil Pelajaran Malaysia holders.
"This will be a big burden to employers especially in Perlis, as the minimum wage of RM1,500 was also quite difficult on them.
"However, employers are forced to adhere to this new policy, causing them to incur more costs. What about smaller companies, would they be able to pay the minimum wage?" he was quoted as saying.
Koay told the Malay daily that the increase in wages may cause the prices of goods to go up, and also increase the risk of companies laying off workers to cut costs.
He said the government should review the policy, adding that the minimum wage was only suitable to be implemented in major cities in Kuala Lumpur and Selangor.
Meanwhile, Malay Chamber of Commerce Kelantan treasurer Dr Mohd Fazlan Ghazali said the minimum wage of RM1,700 should not be implemented in the state as the cost of living there was low.
"For example, if a company had 10 staff and paid them RM1,500 each, they would spend RM15,000 on salaries.
"If the pay was increased to RM1,700 monthly, the employers would have to bear an extra RM2,000 to pay their staff. It may look like a small number but it has a significant impact on companies," he said, adding that if the new minimum wage was implemented small and medium enterprises in Kelantan would not thrive.
He added that the most suitable wage to be implemented in Kelantan was around RM1,500 for a regular job,
Meanwhile, Sabah Chamber of Commerce president Dr Anita Mohamed said business owners in the state were struggling with the high cost of raw materials.
She added that when combined with logistics expenses and increased minimum wage rates, many traders in the state may face challenges to sustain their business.
"I think in Sabah, a minimum wage of RM1,700 is too high. If we look at the increase in the minimum wage over the past few years, it has been quite drastic, starting from RM1,000 to RM1,200 and now reaching RM1,700," she was quoted as saying.