Charles Santiago
On 26 September, Prime Minister Anwar Ibrahim said workers were stuck on RM1,700 while productivity and profits kept rising. He was right.
Four days later, Entrepreneur Development and Cooperatives Minister Steven Sim announced that the cabinet had agreed to exempt micro, small and medium enterprises (MSMEs) from the next minimum wage increase for now.
That is a direct contradiction.
Two rules, one workforce
MSMEs employ 8.1 million people, or 48.7% of Malaysia’s workforce.
- Sign up for Aliran's free daily email updates or weekly newsletters or both
- Make a one-off donation to Persatuan Aliran Kesedaran Negara (ALIRAN), Maybank a/c 507246118995 or CIMB a/c 8004240948
- Make a pledge or schedule an auto donation to Aliran every month or every quarter
- Become an Aliran member
This exemption means two cleaners doing the same work could be legally entitled to different pay. One works for a large company and the other for a smaller firm.
Can small firms afford it?
The argument is that MSMEs cannot afford higher wages.
But gross domestic product from MSMEs grew 5.7% in 2025, faster than the overall economy’s 5.2%.
Labour productivity also rose 4.1% to RM85,299 per worker a year, or about RM7,100 a month.
Low wages
So where does that value go?
For every RM100 Malaysia’s economy produces, workers receive about RM34. In the EU, workers get about RM48 and in Germany RM55.
The government promised 40% of GDP to workers by 2025 under the 12th Malaysia Plan and missed it.
People are already struggling with food, rent, transport, childcare and healthcare. Even RM2,000 is still far below a living wage.
Bank Negara estimated a living wage for a single adult in Kuala Lumpur at RM2,700 about eight years ago. The benchmark used by government-linked investment companies and government-linked companies is now about RM3,100.
A better way
There is a better way to support small firms without sacrificing workers.
When South Korea raised its minimum wage sharply in 2018, it kept one wage for everyone. It also gave small firms a monthly subsidy of 130,000 won for each low-paid worker. Firms that got the help kept their staff.
Budget 2027 will be revealed on 9 October. The government should not be creating divides. It needs to lift the wage floor for every worker.
Charles Santiago is a prominent Malaysian politician, economist and human rights advocate who served three terms as the MP for Klang and has twice chaired the National Water Services Commission.
AGENDA RAKYAT - Lima perkara utama
- Tegakkan maruah serta kualiti kehidupan rakyat
- Galakkan pembangunan saksama, lestari serta tangani krisis alam sekitar
- Raikan kerencaman dan keterangkuman
- Selamatkan demokrasi dan angkatkan keluhuran undang-undang
- Lawan rasuah dan kronisme
