Small firms will suffer if forced to reveal salaries, say business groups

 Two associations call for a voluntary approach which would let smaller firms compete for talent without adding compliance costs.

Business groups say compulsory disclosure of salary offers could drive away jobseekers and make it easier for bigger firms to poach talent.

PETALING JAYA:

The government should allow smaller firms to make voluntary disclosures of salary figures instead of making it compulsory, says a trade association and an employers federation.

They said requiring smaller firms to publish wage bands could backfire, driving away jobseekers and exposing small and medium enterprises to poaching by larger companies with deeper pockets.

William Ng, president of the Small and Medium Enterprises Association (Samenta) said the firms operate on flexible pay structures tied to individual skills and business impact rather than rigid grading systems, making blanket disclosure rules impractical.

“If disclosure is made compulsory, smaller companies who are already seen as unattractive employers may be shunned by jobseekers before they even have a chance to pitch non-monetary value propositions,” he told FMT.

He said compulsory public disclosures would enable larger companies with deeper pockets to benchmark against SME postings and outbid them by 10% to 20% to poach trained staff.

“SMEs already bear the brunt of training fresh graduates and junior staff, often acting as the country’s de facto training ground. Exposing pay bands without corresponding productivity growth will accelerate talent drain,” he added.

Malaysian Employers Federation president Syed Hussain Syed Husman said the federation supports wage transparency in principle but warned that a mandatory regime would burden micro, small and medium enterprises with compliance costs.

“Large companies generally have established HR systems, salary structures, and market-benchmarking capabilities. Many MSMEs do not have the same resources,” Syed Hussain said.

He proposed a phased, voluntary rollout starting with larger employers, with clear guidelines and exemptions for smaller businesses if a compulsory framework is eventually introduced.

Syed Hussain also warned that disclosure without safeguards could trigger aggressive headhunting, wage inflation and workplace tension from salary comparisons. “Transparency should build trust, not undermine it. The objective is to give employees better information about the market value of their skills while preserving legitimate salary confidentiality,” he said.

Economy minister Akmal Nasir reportedly said at a forum on Sept 7 that his ministry is looking at ways to make salary offers more transparent and equitable, rather than setting an absolute wage target. He said that there should be a requirement for salary offers to be made more transparent and fair.

The initiative is in line with the government’s goal to raise the median wage, currently around RM3,600, and ensure that economic growth results in real wage gains for workers. - FMT