KUCHING: Malaysia needs wage growth tied to productivity, skills and career progression rather than repeated minimum-wage increases.
Malaysian Employers Federation (MEF) senior adviser for Government, Media & International Engagement Datuk Dr Syed Hussain Syed Husman said the country needed a comprehensive and sustainable wage strategy rather than treating the minimum wage as the main response to wage and cost-of-living challenges.
MEF was responding to Economy Minister Datuk Seri Akmal Nasrullah Mohd Nasir’s call for Malaysia’s wage agenda under the 13th Malaysia Plan to go beyond minimum-wage protection to include stronger wage progression and better pay for highly skilled workers.
Akmal Nasrullah had also said incentives under the Progressive Wage Policy should be linked with productivity, training and upskilling.
Syed Hussain said the minister’s position was aligned with MEF’s view that higher wages needed to be supported by higher productivity, stronger skills and greater value creation.
“MEF welcomes the Economy Minister’s recognition that investment numbers alone are not enough and that better-paying jobs, productivity, skills development and stronger local businesses must be part of the equation.
“The same principle applies to wages. Higher wages must be supported by higher productivity, stronger skills and greater value creation. Simply increasing the wage floor every two years does not, by itself, constitute a sustainable wage policy,” he said.
He called for a more comprehensive national wage framework covering wage protection, wage progression and productivity-linked career advancement.
“The minimum wage is a floor. It should not become the ceiling, nor should it become the default mechanism for determining the entire wage structure.
“If the wage floor is repeatedly increased without sufficient attention to the wages of semi-skilled, skilled and highly skilled workers, we risk worsening wage compression rather than solving it,” he said.
Citing the latest Salaries and Wages Survey 2025, he said the median monthly wage of Malaysian citizens increased 5.3 per cent to RM2,940.
The median wage for skilled workers stood at RM5,057, compared with RM2,223 for semi-skilled workers and RM1,758 for low-skilled workers.
Syed Hussain said the figures reinforced the need to focus on wage ladders and career progression rather than concentrating almost exclusively on the minimum wage.
“Malaysia needs to ensure that a worker who acquires new skills, takes on greater responsibilities and becomes more productive sees a meaningful increase in earnings.
“That is what a genuine progressive wage system should achieve, progression, not merely periodic adjustment of the wage floor,” he said.
He also said wage policy could not be considered separately from the cost of living.
He agreed with the Economy Minister that higher nominal wages might not translate into better living standards if the cost of housing, food, transportation, education, utilities and other essentials continued rising.
At the same time, he called for greater attention to the cost of doing business, particularly for MSMEs.
He said employers, particularly MSMEs, were facing margin pressure from rising operating and financing costs, utilities, logistics, compliance requirements and other business expenses.
“Delayed payments, slower cash-flow cycles and difficulties in obtaining financing could place additional pressure on businesses already operating on relatively thin margins.
“For some smaller businesses, the issue is no longer simply whether they can afford to increase wages. It is whether they can remain financially sustainable while absorbing the cumulative increase in the cost of employing people,” he said.
He said wage increases that were not accompanied by improvements in productivity, business efficiency and the wider cost environment could ultimately be absorbed through higher prices, reduced hiring, lower margins, slower expansion or weaker business viability.
He stressed that wage policy should therefore focus on raising real incomes rather than nominal wages alone.
“Ultimately, if the cost of living rises immediately after a wage increase, workers will not experience a meaningful improvement in purchasing power.
“We must therefore increase real incomes, not merely nominal wages. That requires managing the cost of living as well as the cost of doing business,” he said.
Syed Hussain also stressed that the cost of employing a worker extended beyond the basic monthly wage.
“Employers also incurred EPF, SOCSO, EIS and HRD Corp contributions, as well as insurance, overtime, leave, medical benefits, training, recruitment, uniforms, equipment, welfare and other employment-related costs.
“Therefore, every increase in basic wages has a multiplier effect on the total cost of employment,” he said.
He said policymakers should assess wage proposals based on their total employment-cost impact, particularly on MSMEs and labour-intensive sectors.
“An increase in the basic wage is never just an increase in the basic wage from the employer’s perspective.
“It affects the entire wage structure and can trigger corresponding increases in statutory contributions, overtime costs and wage compression throughout the organisation.”
The government is expected to conduct a comprehensive assessment of the Progressive Wage Policy by the end of 2026 or early 2027, while the current policy is scheduled to run until the end of 2027. He said the review should examine not only how much wages had increased, but whether the policy had generated higher productivity, better skills and competencies, meaningful career progression and improved business competitiveness.
He added that the assessment should also consider whether the policy had strengthened the retention of skilled workers, increased the adoption of technology and automation, created higher-value employment and delivered sustainable wage growth without undermining business viability.
“The real test of a wage policy is not how much the wage has been increased on paper, but whether workers are genuinely better off and businesses remain sufficiently competitive to continue investing, hiring and creating better jobs,” he said.
He also supported Akmal Nasrullah’s call for investment to be assessed by its ability to generate skilled employment, raise productivity and strengthen local companies rather than simply by its headline value.
He said Malaysia needed investment that created quality employment, transferred technology, developed Malaysian talent, strengthened local suppliers and raised productivity.
“At the same time, we must ensure that domestic companies, particularly MSMEs, are not placed under excessive cost pressures that weaken their ability to participate in these value chains.
“A competitive investment environment required policy stability, predictable regulation, access to financing, efficient approvals, reasonable compliance costs and a productive workforce.”
Syed Hussain also called for wage issues to be addressed through a coordinated whole-of-government approach involving not only the Ministry of Human Resources but also the Economy, Finance, Investment, Trade, Domestic Trade, Education and other relevant agencies.
“The Government cannot increase wages in isolation and expect the rest of the economy to absorb the impact indefinitely.
“We need to look simultaneously at wages, productivity, skills, inflation, housing, transport, financing, business costs, taxation, statutory employment costs and the competitiveness of Malaysian companies.
“If we want Malaysians to earn more, we must create an economy capable of paying more,” he said.
He said MEF would continue to put employers’ perspectives forward through the Majlis Perundingan Gaji Negara (MPGN) and relevant tripartite mechanisms.
“The federation looked forward to engaging with the government to ensure Malaysia’s wage policy remained fair to workers, sustainable for employers and supportive of national competitiveness.”
