WAGE reforms must go hand in hand with higher productivity, stronger business competitiveness and better support for small businesses, MCA vice president Datuk Seri Dr Wee Jeck Seng said, warning that relying solely on higher wages could put struggling SMEs under greater pressure.
His remarks come as the government pushes to narrow income disparities between states and workers of different skill levels through measures such as the Progressive Wage Policy, while increasing development allocations for states including Kedah, Kelantan, Perlis, Terengganu, Sabah and Sarawak.
Wee said the objective of raising incomes was not misplaced, but policies should not focus solely on increasing wages and government spending without helping businesses become more productive, secure more orders, access financing and remain competitive.
“Wages should increase, but healthy wage growth should come from businesses creating more value, rather than businesses seeing no increase in revenue while their costs are raised first,” he said.
He stressed that wage growth should be accompanied by improvements in productivity, skills training and employees’ career development to ensure businesses can sustain higher pay.
Wee also welcomed the government’s decision to channel more development resources to less-developed states, but said success should not be measured simply by how much money is allocated.
“The focus should also be on how much private investment, high-value industries and better-paying jobs are ultimately created,” he remarked.
He urged the government to prioritise manufacturing upgrades, logistics, the digital economy, high-value agriculture, tourism, Technical and Vocational Education and Training (TVET), and technology-driven SMEs as part of a broader strategy to boost productivity.
Wee said the Progressive Wage Policy should continue to uphold the principle of linking productivity with wages, while providing businesses with support to train workers, adopt automation and digital tools, and expand into export markets.
He noted that SMEs remain the backbone of Malaysia’s economy. According to official 2025 figures, SMEs accounted for 96.2% of business establishments, or about 1.29 million businesses, and contributed 39.7% of the country’s gross domestic product.
“Many are not large corporations earning huge profits, but restaurants, small manufacturing factories, retailers, family businesses and service providers,” he added.
Wee warned that businesses operating on thin profit margins could struggle if they face higher wages alongside rising compliance and operating costs without corresponding growth in revenue.
“If a small business earns only a few thousand ringgit in profit each month, but is required to raise wages, shoulder higher compliance costs and bear various new expenses, it cannot simply conjure up more money,” he said.
He said the consequences could include higher prices, reduced hiring, shorter operating hours, greater reliance on automation or even business closures.
“Workers need better incomes, but businesses must also have business opportunities. Without viable businesses, there are no wages. If businesses collapse, even a higher minimum wage means little to those who have lost their jobs,” he said. ‒ Sept 25, 2026
Main image: Bernama
