KUALA LUMPUR: Micro, small, and medium enterprises (MSMEs) should be allowed to offer wages that are decent and affordable for them, rather than being required to meet a high minimum wage that could lead to business closures, said the Malaysian Employers Federation (MEF).

Its president Datuk Syed Hussain Syed Husman said potential employees should also have the flexibility to choose whether to accept jobs based on the minimum wage offered by employers.

He said many MSMEs were still struggling with cash flow issues and shrinking profit margins, often at five per cent or less.

"It's not an issue for well-performing employers to offer higher salaries. However, our main concern is for MSMEs, which make up over 90 per cent of small businesses.

"Many MSMEs are living from hand to mouth. This is the harsh reality," he said when contacted today.

Syed Hussain said this when asked to comment on Human Resources Minister Steven Sim's announcement that a proposal for a new minimum wage will be presented at a cabinet meeting next month.

Syed Hussain also suggested that the government consider exempting MSMEs from minimum wage requirements, following the approach taken by the United States, Japan and South Korea.

He said MSMEs should be supported to prevent them from giving up due to the high operational costs.

"These businesses are crucial for employment, providing initial job experience for workers who eventually move on to larger corporations, including multinational companies and government-linked companies.

"MSMEs serve as a vital source of job opportunities and experience. However, they cannot afford to pay higher salaries, as most operate with profit margins of only five to 10 per cent.

"We need to be cautious about implementing policies that affect these businesses," he said.

The Malaysian Trades Union Congress (MTUC) president Mohd Effendy Abdul Ghani when contacted, meanwhile, said the proposal of a new minimum wage is crucial in ensuring the welfare and well-being of workers in the country, especially in the face of current economic challenges and rising living costs.

"We hope that the new minimum wage rate will take into account the current inflation rate and the rising costs of goods and services that are increasingly burdening workers nationwide.

"MTUC also emphasises the importance of a thorough negotiation and discussion process with trade unions, employers and other stakeholders in determining the new minimum wage rate.

"This is essential to ensure that the proposed rate is fair and balanced for all parties, without placing undue pressure on employers, while simultaneously providing the necessary relief to workers."

Effendy said an increase in the minimum wage is expected to bring significant positive effects on workers' quality of life and financial stability.

He, however, noted that there were some challenges arising from previous minimum wage adjustments.

"One major challenge is the impact on business operating costs, particularly for small and medium enterprises.

"Some businesses have reported increased operating costs due to minimum wage hikes, which sometimes lead to workforce reductions or higher prices for products and services, affecting the competitiveness of those businesses.

"Therefore, it is important to ensure that the minimum wage increase is accompanied by support for businesses, such as tax incentives or subsidies, to help them adjust to the increase."

On Friday, Prime Minister Datuk Seri Anwar Ibrahim expressed hope that the private sector, especially companies with high profits, would review their salary schemes to provide more reasonable remuneration to their employees.

The implementation of the new minimum wage of RM1,500 was approved by the government on March 19, 2022, and was gazetted in the Federal Government Gazette issued by the Attorney General's Chambers on April 27 of the same year.

The Minimum Wage Order 2022 was subsequently enforced on May 1, 2022, for all sectors regardless of the region, for employers who employ five or more workers.

However, for employers with fewer than five employees, the government allowed a deferment of the implementation of the minimum wage until June 30, 2023.

https://www.nst.com.my/news/nation/2024/08/1093228/allow-msmes-offer-fair-wages-within-their-means-prevent-business