Malaysian SMEs Exempt from Wage Hike but Face Talent Retention Challenges
Malaysian SMEs with annual sales below RM50 million are exempt from the RM2,000 minimum wage taking effect in June 2027, but industry leaders warn the increase will still make hiring and retaining workers harder.
Newsnibs Staff
- 2026-10-17
- Updated 5:53 PM UTC
Small and medium-sized businesses in Malaysia with annual sales below RM50 million will be exempted from the national minimum wage increase to RM2,000, which takes effect in June 2027. But the exemption will not stop smaller firms from feeling the wage increase's effects on hiring, according to Calvin Kwan, chairman of the Small and Medium Enterprises Association of Malaysia's northern region.
Kwan said jobseekers are likely to treat RM2,000 as their starting expectation regardless of which companies are covered by the mandate, making it harder for exempted SMEs to recruit at the current RM1,700 floor. Existing workers, he said, may also demand higher pay or leave for employers offering the new rate.
Kwan said that pressure will land hardest on manufacturers, printers, and packaging companies, which depend on production workers, machine operators, and technicians, roles already competing against better-paying offers elsewhere.
To offset the cost, Kwan is calling on the government to help SMEs raise productivity through grants for automation, machinery, and staff training, along with apprenticeship and skills certification programs. He also wants assistance with rising energy, transport, and equipment costs, and easier access to financing through simpler applications and clearer eligibility rules.
Kwan said the one-percentage-point corporate tax cut included in Budget 2027 will help profitable businesses but do little for companies earning thin margins or struggling with cash flow.
He argued the government should measure the success of its support measures by how many businesses received help and whether their productivity improved, not by how much money was allocated.
Photo by Arno Senoner on Unsplash
