PETALING JAYA: Since the new RM1,700 minimum wage came into effect on Saturday (Feb 1), small businesses are reportedly struggling to stay afloat with the rising costs.
The new minimum wage order, announced in Budget 2025, marks a RM200 hike from RM1,500 and will impact 4.73 million workers and applies to all businesses employing five or more employees along with professional sectors regardless of the size of workforce.
The new rate for smaller businesses hiring less than five workers will take effect on August 1.
According to the New Straits Times, several small and medium enterprises (SME) have shared their worries on keeping up with the surge in payroll.
A managing director of a consulting services company, K. Muniandy, voiced his concern over the company being in line with the expectations to increase their workers’ income since the new minimum wage order with the firm’s monthly revenue remaining stagnant.
He said the rising costs “forces” them to either “absorb” it or pass it onto clients, questioning if customers would even pay if service charges increase, thereby calling for the need of a “government intervention”, whether in wage subsidies, taxes or moratorium on compliance, as quoted.
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“It’s impossible to avoid a cascading effect, with price hikes hitting consumers. Another factor to consider is those earning just above the new minimum wage. They will see no increase in income but will face rising costs.
“It’s a double blow - higher wages for some, but higher expenses for all,“ he was quoted as saying.
Another business owner, Rohani Saad is also facing a similar predicament where the Johor-based spa owner cites “sluggish”, as quoted, business determined by the amount of customers, said to frequent the establishment more on weekends rather than weekdays.
Rohani added that her eight spa therapists’ income was a basic of RM1,500 with with Employees Provident Fund (EPF) and Social Security Organisation (Perkeso) contributions provided, on top of commissions and tips.
“We operate seven days a week, but the income is not steady. Most of our clients are Singaporeans who usually cross the border on Saturdays and Sundays. Paying higher wages when revenue fluctuates makes survival uncertain.
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“With the economy as it is, paying RM1,700 per worker is tough. New spas are opening in Johor Baru almost daily to attract Singaporeans, making competition fierce. A wage hike will hit our business hard,“ she was quoted as saying.
On the other hand, family-owned hardware store owner Tian Soon calls the new minimum wage order “ridiculous”, stating that SME’s should be “treated differently”, as quoted.
Running the store with his two sons and daughters-in law, he pays them RM1,500 each in addition with a generous year-end bonus depending on the revenue. Besides that, the business covers the family’s housing, food and childrens’ education.
It was previously reported that the minimum wage adjustment was a part of the government’s broader efforts to improve workers’ salaries, aligning with the Progressive Wage Policy and skills training programmes, according to the Ministry of Human Resources (KESUMA).
Employers found not complying with the wage order is considered an offence under the National Wages Consultative Council Act 2011 (Act 732), which could result in penalties.
