MALAYSIA’S strong economic growth must translate into higher real wages and better-quality jobs for Malaysians, says MCA Economic and SMEs Affairs Committee chairman Datuk Ir Lawrence Low.
He said the economy grew by 5.4% in the first quarter of 2026 and 6.0% in the second quarter, but headline GDP growth alone did not show whether workers were benefiting through stronger purchasing power.
“Malaysia’s economy is growing, but the key question is whether this growth is reaching ordinary Malaysians through higher real wages and better jobs,” Low stated.
The issue comes amid concerns over the gap between productivity growth and wage growth. Bank Negara Malaysia’s Economic and Monetary Review 2025 found that labour productivity had increased by 9% cumulatively since 2019, while private-sector real wages per worker had declined by 1.7% over the same period.
Low, who is also the party’s vice president, also pointed to labour-market data showing that 66.1% of the 31,500 jobs created in the second quarter were semi-skilled, compared with 25.2% in skilled positions.
Department of Statistics Malaysia (DOSM) reported that semi-skilled jobs accounted for 20,800 of the new positions, compared with 7,900 skilled jobs.
“This tells us that economic expansion must be accompanied by a deliberate effort to create more high-value, high-paying employment,” he noted.
Low said this was particularly important for micro, small and medium enterprises (MSMEs), which employed 8.09 million people in 2025, or 48.7% of total employment. DOSM said MSMEs also accounted for 39.7% of Malaysia’s GDP last year.
He said SMEs needed a wage policy that allowed them to plan their costs while ensuring workers were able to benefit from productivity gains.
“Neither businesses nor workers can rely indefinitely on temporary exemptions or short-term measures. Employers need clarity so they can plan, while employees need a credible pathway towards higher incomes,” Low added.
Link investment to better-paying jobs
Low said government investment incentives should be tied more closely to the quality of employment created.
He proposed that companies receiving such incentives report annually on the number of jobs created for Malaysians and the salary levels attached to those positions.
The same approach, he said, should apply to high-growth sectors such as services and data centres.
“Investment should not be measured only by the amount of capital brought into the country. We should also ask what kind of jobs it creates, what Malaysians are paid and whether those jobs offer meaningful opportunities for career progression,” he continued.
Give SMEs more certainty on wages
Low also called for greater clarity over wage policies, including any future changes to the minimum wage.
Malaysia’s RM1,700 minimum wage took effect for employers with five or more workers and professional activities in February 2025, before being extended to all covered private-sector employers from August 2025, with domestic servants excluded.
Low said any future adjustment should be announced at least 12 months in advance and accompanied by the National Wages Consultative Council’s assessment of its economic and employment impact.
He also proposed additional tax deductions for SMEs that invest in automation, digitalisation and employee training.
“SMEs should be encouraged to raise wages by raising productivity. If a business invests in technology and skills development, the tax system should recognise that investment,” he said.
Policy changes must be predictable
Low said businesses also needed greater certainty over regulatory costs.
He cited changes to the e-Invoice implementation timeline and exemption thresholds as an example of how policy changes could create additional costs for businesses that had invested early to comply.
The Inland Revenue Board’s current timeline, updated on Aug 30, exempts taxpayers with annual revenue below RM3 mil, following earlier phased implementation dates.
“Businesses are not afraid of reform. They are afraid of unpredictable reforms. When major changes are introduced repeatedly or without sufficient notice, businesses face additional compliance costs and uncertainty,” Low said.
He called for sufficient notice for major changes involving wages, taxation, EPF, e-Invoice and other regulatory costs.
Low also stressed that Budget 2027 should clearly state the government’s position following its review of the mandatory 2% EPF contribution for foreign workers, an issue MCA has previously opposed.
The contribution, which applies to eligible non-Malaysian employees, took effect from October 2025, with both employers and employees contributing 2% of wages.
He proposed that the government consider publishing a 2027 Business Statutory Costs and Compliance Policy Timeline setting out major regulatory and cost changes in advance.
“Malaysians need more than strong economic growth figures. They need higher real wages, quality jobs and living standards that genuinely improve,” Low said. ‒ Focus Malaysia
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