The Malaysian Plastics Manufacturers Association (MPMA) believes there is no need for a further increase in Malaysia’s statutory minimum wage at this juncture, arguing that the country’s tight labour market is already creating natural upward pressure on wages.
With unemployment at around 3%, employers are competing strongly for workers and making significant efforts to attract and retain employees. According to MPMA, market forces are therefore already contributing to wage growth, and this process should be allowed to continue rather than being replaced by a large, across-the-board statutory increase.
MPMA Calls Proposed RM3,100 Minimum Wage Unrealistic
MPMA considers the proposed RM3,100 minimum wage unrealistic and unnecessary under current economic conditions.
The association noted that a substantial increase would not only raise the wages of minimum-wage workers but could also increase payroll costs across different employee levels as companies seek to maintain appropriate wage differentials.
This comes as manufacturers continue to contend with higher energy, logistics, freight, insurance and raw-material costs, alongside ongoing global supply chain and geopolitical pressures.
For manufacturers in particular, MPMA believes that any increase in wages must be supported by corresponding improvements in productivity and value creation.
Productivity Key to Sustainable Wage Growth
MPMA said employers create the conditions for higher productivity through investment in technology, automation, digitalisation, skills and improved processes, while employees convert these improvements into business results.
The resulting productivity gains, it argued, should benefit both companies and employees through sustainable, productivity-based wage progression.
Rather than repeatedly increasing the statutory wage floor, MPMA believes Malaysia should focus on strengthening the ability of businesses to generate enough value to pay higher wages sustainably.
Automation and Skills Development Should Be Prioritised
The association is calling for greater Government support to help businesses improve productivity and manage rising labour costs.
This includes stronger automation grants, tax incentives and skills-development support, which could help manufacturers invest in technologies and capabilities that raise productivity.
At the same time, employers should continue investing in productivity and their workforce, while employees participate in and benefit from the gains generated by these improvements.
For Malaysia’s manufacturing sector, MPMA said higher wages should ultimately be underpinned by a more productive and higher-value economy.
Concerns Over Wider Economic Impact
MPMA also raised concerns that a broad minimum wage increase could have unintended economic consequences.
Malaysia’s workforce includes a significant number of foreign workers, and the association noted that a substantial increase in wages could result in a greater portion of additional income being remitted overseas.
This could potentially increase the outflow of funds from Malaysia rather than generating the full economic multiplier effect domestically.
MPMA said this consideration should be weighed alongside the potential impact of a higher minimum wage on business costs, consumer prices, competitiveness and investment.
Higher Wages Should Follow Higher Productivity
Ultimately, MPMA believes that wage growth should be closely linked to Malaysia’s ability to become a more productive and higher-value economy.
The association said employers, employees and the Government each have a role to play: businesses can invest in automation, technology and skills; employees can contribute to the productivity gains generated by these investments; and the Government can facilitate this transition through targeted incentives and support.
MPMA believes higher wages should ultimately be the outcome of a more productive and higher-value Malaysian economy, rather than simply the result of repeatedly raising the statutory wage floor.
