Minimum wage hike will also raise operating costs, property prices, says group

 The Master Builders Association Malaysia says any wage increase should be implemented in stages through industry consultations.

Master Builders Association Malaysia president Kenneth Liew said the construction sector’s heavy reliance on foreign workers means the additional cost will not be limited to basic wages but also involves overtime rates and related payments.

PETALING JAYA:

A minimum wage hike risks increasing operating costs in the construction sector, which could in turn drive up property prices and project costs, the Master Builders Association Malaysia (MBAM) said today.

Its president, Kenneth Liew, said the cost of labour was among the largest components in the construction industry, making any increase in the minimum wage likely to affect employers’ operating costs.

Kenneth Liew.

Liew said the construction sector’s heavy reliance on foreign workers meant the additional cost would not be limited to basic wages but would also involve overtime rates and related payments.

“Many contractors are tied to fixed-price contracts signed before this review and cannot easily pass on the additional costs to buyers. If the burden is not shared, it will eventually be reflected in project costs and property prices,” he told FMT.

To ease the pressure, he said, the government should implement the minimum wage hike in stages through consultations with the industry, while providing a price adjustment mechanism for existing public and private sector contracts.

Persatuan Kontraktor Bumiputera Kelas F Malaysia president Tukiman Radion said most small contractors were not directly affected by the wage structure adjustment as a large proportion of their workers were freelancers or family members.

However, he said, a minimum wage hike would put pressure on some contractors who employed permanent workers for maintenance and cleaning duties.

“Projects handled by small contractors are mostly small-scale and are still based on old prices.

“Permanent workers start asking for higher wages when the minimum wage is raised, while the payments contractors receive from customers remain the same,” he said.

On Aug 18, human resources minister R Ramanan said the government was reviewing the RM1,700 minimum wage, with the decision on whether to maintain or raise the rate to be made by the National Wages and Gig Economy Consultative Council.

Details on whether the rate will be increased are expected to be announced during the tabling of the 2027 budget on Oct 9.

Entrepreneur development and cooperatives minister Steven Sim has confirmed that micro, small and medium-sized enterprises would be exempted from further increases in minimum wage for the time being. - FMT