In industry survey, manufacturers complain against minimum wage hike, freeze on foreign workers enforced by Putrajaya

KUALA LUMPUR, Sept 2 — The Malaysian Manufacturers Federation (FMM) has voiced concerns over the government’s recent policies on minimum wage increases and foreign worker hiring freezes, warning of potential repercussions on local manufacturers and small and medium enterprises (SMEs).

FMM president Tan Sri Soh Thian Lai said local manufacturers and SMEs may not survive if the government enforces the Progressive Wage Policy (PWP) on the private sector with steep salary hikes.

The concern was reflected in the 25th edition of the FMM Business Conditions Survey released today.

According to the survey, while there is broad support for a minimum wage increase, most respondents favour a moderate increment.

The findings showed 57 per cent of respondents supported a minimal increase in the minimum wage to RM1,600, while only a minority, 14 per cent and 13 per cent expressed willingness to support wages of RM1,700 and RM1,800, respectively.

“We support the government’s PWP project, but the reality is that many SMEs may not withstand a significant hike in salary costs,” Soh said.

“If the minimum wage is set at RM2,000, it could greatly affect many SMEs due to escalating operational expenses.”

The government have recently piloted a voluntary PWP from May to August, setting a wage floor of RM1,810 for participating employers.

This amount covers entry-level positions, with some roles like motorcycle riders and astrologers starting at RM2,205.

In addition to wage issues, Soh said challenges stemming from the current freeze on foreign worker recruitment, which began in March 2023 and was extended earlier this year.

“We urge the government to reconsider this freeze, as the demand for labour, particularly for new manufacturing ventures, remains high.

“Existing foreign workers here are already engaged, leaving a gap for investors aiming to establish operations here.”

Citing figures from the Social Security Organisation, Soh said Malaysia hosts approximately 1.6 million legal foreign workers, with an additional one million applications previously approved, comprising around 2.5 million or 15 per cent of the nation’s 17.1 million workforce.

Despite the hurdles, Soh said FMM has been in discussions with both the Human Resources and Home Ministries about the issue and there have been positive developments.