The Malaysian Industrial Commercial Service Employers Association proposes a temporary tax rebate or wage offset in the first year for firms with a RM50 million to RM100 million turnover.
While the Malaysian Industrial Commercial Service Employers Association (Micsea) welcomed the exemption from the increase for MSMEs with an annual turnover of below RM50 million, it proposed a temporary wage-related tax rebate or wage offset in the first year of implementation for firms in the RM50 million to RM100 million range.
It said this was because of the “cliff-edge” effect, as a “company with a turnover of RM49 million and one with RM51 million may have similar workforces, margins and business models, yet face very different regulatory obligations”.
“The objective is not to delay compliance. The objective is to prevent the transition from becoming a penalty for businesses that have successfully grown beyond the MSME threshold,” it said in a statement following the tabling of the 2027 budget proposals in the Dewan Rakyat today.
Micsea also said the RM2,500 minimum salary for semi-skilled workers and graduates should not be a blanket requirement across all positions, but linked to relevant certifications and qualifications.
It warned that a sharp rise in entry-level pay could cause wage compression as pay gaps between junior staff, supervisors and middle managers in MSMEs are often narrow, prompting experienced employees to demand matching pay increases.
“Micsea recommends linking the framework to Malaysian Standard Classification of Occupations classifications, technical and vocational education and training qualifications, Malaysian Skills Certificate Levels 4 and 5 competencies, job complexity, professional certification, and demonstrable productivity,” it said.
The Malaysian Employers’ Federation (MEF) said the government should clarify how the annual sales threshold of RM50 million will be assessed, including the relevant financial year, treatment of related companies, and the application of the exemption to different business structures.
MEF senior adviser Syed Hussain Syed Husman said while MEF encourages employers to reward employees in line with their business performance, productivity, skills and contributions, “we must recognise that businesses have different financial capacities, particularly among MSMEs”.
“The ultimate objective is to build sustainable businesses that can continuously create quality jobs and provide better wages for Malaysian workers,” he said in a separate statement.
MEF also said the government should strengthen complementary measures that help businesses improve productivity and pay higher wages over the longer term.
“These include targeted productivity incentives, digitalisation and automation support, skills development, and measures to reduce the cost of doing business, particularly for MSMEs,” it said.
Tabling the 2027 budget, Prime Minister Anwar Ibrahim said MSMEs with annual sales below RM50 million will be exempted from the RM2,000 minimum wage to allow them time to adjust their business models.
He said that more than four million workers will benefit from the new minimum wage. - FMT
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