Minimum wage exemption to ease MSME staffing adjustments
SMEs recording annual sales below RM50 million will be temporarily exempt from the RM2,000 monthly minimum wage taking effect in June 2027.
Budget 2027’s temporary minimum wage exemption would give eligible businesses time to revise hiring arrangements and pay structures, according to SME Corporation Malaysia chief executive officer Rizal Nainy.
Speaking on Bernama TV’s The Nation programme on Oct 23, Rizal said the adjustment period would allow micro, small and medium enterprises (MSMEs) to align operations with digitalisation and automation. He said these technologies could boost productivity while cutting operating expenses, especially labour costs.
Rizal urged the government to consider targeted measures that would make such programmes available to MSMEs. Businesses could examine how technology might complement their employees, he said, helping them gain more value from higher wages for skilled staff rather than depending on low-skilled workers.
Prime Minister Datuk Seri Anwar Ibrahim announced on Oct 9 that the monthly minimum wage would rise from RM1,700 to RM2,000 in June 2027. More than four million workers would benefit, while SMEs below the annual sales threshold would receive a temporary exemption.
Anwar also announced an increase in MSME financing guarantees and loan facilities, from RM50 billion to RM57 billion in 2027, alongside a one percentage point reduction in corporate income tax for eligible MSMEs. Rizal said he believed the RM57 billion allocation would help firms expand, scale up and increase their contribution to gross domestic product.
