Local SMEs struggle to compete for talent with larger firms, says MEF

 

MEF executive director Shamsuddin Bardan said SMEs, which make up about 98% of local businesses, often serve as training grounds for larger companies, leading to high employee turnover. (Bernama pic)

KUALA LUMPUR: 

Local small and medium enterprises (SMEs) are struggling to attract and retain skilled talent because the salary they are able to offer is lower than that of larger firms, says Malaysian Employers Federation (MEF) executive director Shamsuddin Bardan.

While SMEs account for about 98% of local businesses and play a crucial role in Malaysia’s economy, Shamsuddin said they often act as training grounds for larger corporations. 

After a few years of experience at SMEs, employees become more marketable and are often lured away by bigger companies offering better salaries,

 he said in a forum at the 11th Malaysia Statistics Conference here today.

Shamsuddin said that the progressive wage model could help address this issue by offering a higher base salary than the current minimum wage in Malaysia.

The minimum wage in Malaysia is currently set at RM1,500.

With progressive wage guidelines recommending a starting salary of at least RM1,810 for entry-level positions, adopting this model could help SMEs attract better candidates and level the playing field for these businesses, he said.

Under the progressive wage model, there is a policy to ensure that even those on the highest salary receive the necessary training and upskilling,

 Shamsuddin said.

However, he cautioned that implementing a progressive wage model does not automatically translate to increased productivity, describing it as 

wishful thinking.

He cited a study by the Malaysia Productivity Corporation (MPC) conducted from 2011 to 2019, which found that wage increases outpaced productivity growth by 1.3% annually.

(Investing in upskilling and wage increases) would also incur additional costs with no guarantee that productivity will rise as a result,

 Shamsuddin said. - FMT