KUALA LUMPUR, Oct 7 — Federal lawmaker Lim Guan Eng (Bagan – DAP) today again called on the government to consider the financial impact on small and medium businesses amid rumours it could raise the minimum wage when tabling Budget 2027, warning that abrupt hikes could disrupt long-term commercial agreements.
Lim, a former finance minister, argued that many enterprises operate under binding multi-year contracts where labor costs are fixed at agreed-upon rates.
“Many businesses have long-term contracts with foreign workers at agreed rates,” the DAP leader said at a press conference in Parliament this afternoon.
“A sudden wage increase would place an unexpected financial burden on employers.”
Lim, a former finance minister, noted that unexpected cost surges could strain operating margins and create operational friction for businesses unable to renegotiate existing contractual terms on short notice.
The former minister has been vocal in opposing the minimum wage hike and mandatory EPF contribution for foreign workers.
Lim claimed employers are often forced to hire foreign workers because it’s difficult to hire locals, particularly for SMEs, although his critics reject the argument as a “script” companies typically deploy to continue suppressing wages.
The former minister’s view closely aligns with the core arguments consistently raised by the Malaysian Employers Federation. The MEF generally opposes frequent or steep statutory minimum wage hikes across the board, favoring wage growth tied strictly “to productivity and market forces”.
Malaysian workers productivity have grown in the last 10 years, yet real wages grew at a fraction of that rate — averaging around 1 per cent annually, with periods of stagnant or declining purchasing power for private-sector employees, data from Bank Negara Malaysia and the Department of Statistics Malaysia showed.
Malaysia’s compensation of employees (CE) share of GDP, that is the portion of economic output paid out as wages, has historically lingered around 32 to 35 per cent, significantly below developed economies, data from the two bodies show.
This means greater share of value creation by Malaysian workers flows to capital returns, corporate profits, and reinvestment rather than payroll.
CE typically sits between 45 to 50 per cent in richer economies.
Date: 7 October, 2026 2:06 pm
Source: Malay Mail
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