The SME Association of Malaysia (SME Malaysia) has welcomed the Cabinet’s decision to temporarily exempt micro, small and medium-sized enterprises (MSMEs) from further increases in the minimum wage.
The decision follows efforts by Entrepreneur and Cooperatives Development Minister YB Steven Sim to highlight the operating pressures currently faced by the sector. The Cabinet agreed to the temporary exemption on 30 September 2026, citing the ability of MSMEs to manage operating cost pressures and current economic challenges.
SME Malaysia said the decision would provide MSMEs with much-needed breathing space amid rising operating costs and ongoing economic challenges.
According to the association, the temporary exemption would help businesses maintain continuity, protect employment and remain competitive while continuing to contribute to Malaysia’s economic growth.
SME Malaysia Supports Progressive Wage Policy
At the same time, SME Malaysia said it supports the Government’s continued efforts to improve workers’ wages and welcomed the use of the Progressive Wage Policy (Dasar Gaji Progresif) to provide wage subsidy support.
The policy is intended to link wage growth with improvements in productivity and operates as a complement to the national minimum wage.
SME Malaysia said the Government should further strengthen the wage incentives and subsidies available under the Progressive Wage Policy by increasing the level of financial support, expanding its coverage and simplifying the application and approval process.
The association said a simpler and more accessible mechanism would allow more MSMEs to benefit from the programme, progressively raise workers’ wages and better manage the additional cost burden arising from wage adjustments.
Balancing Wage Growth and Business Competitiveness
SME Malaysia believes that improving workers’ wages and maintaining business competitiveness can be pursued together.
The association said stronger wage subsidies and incentives would give MSMEs greater capacity to improve employee remuneration while investing in productivity enhancement, digitalisation, skills development and training.
This approach is also in line with the Government’s stated emphasis on linking wage improvements with productivity, training and workers’ skills. The Economy Ministry said in September that the effectiveness of the Progressive Wage Policy is scheduled to be assessed towards the end of 2026 or early 2027.
SME Malaysia said it appreciates the Government’s continued engagement with the SME community and looks forward to further constructive dialogue on a wage policy framework that balances workers’ income growth, business competitiveness and sustainable economic growth.
SME Malaysia to Release Minimum Wage Survey Findings
SME Malaysia will also hold a joint press conference with the Malaysia Retail Chain Association (MRCA) to further address the minimum wage issue and release findings from its recently conducted SMEAM Quick Business Survey: Minimum Wage Review 2026.
The survey is expected to provide further insight into the operating cost pressures faced by businesses, their capacity to absorb further minimum wage adjustments, as well as industry views on the Government’s wage policies and supporting measures.
SME Malaysia hopes the survey findings and feedback from businesses will provide useful input to the Government as it continues reviewing and refining wage policies.
The association said it hopes future measures will remain responsive to the realities faced by businesses, particularly MSMEs, while supporting sustainable wage growth and economic development.
