FMM urges minimum wage review to consider productivity and employers' ability to pay

September 29, 2026

Head Office, KL

FMM In The News: TRADERS UNION.COM, September 28, 2026

Ahead of the presentation of Budget 2027 on 9 Oct, debate over the direction of wage policy in Malaysia has once again come into focus for the manufacturing sector. The Federation of Malaysian Manufacturers wants any minimum wage review to be conducted through a tripartite process that also assesses the cost of living, productivity and companies' ability to absorb costs.

Highlights

FMM President Jacob Lee Chor Kok stressed that the ability to absorb minimum wage increases varies between companies, especially among smaller manufacturers and labour-intensive businesses.
FMM warned that sudden minimum wage adjustments could put pressure on payroll structures and lead companies to reassess pricing, hiring and production plans.
FMM supports wage growth based on productivity, skills and business performance, while stressing that tripartite dialogue is essential to maintain companies' competitiveness.

This article was translated from the original. Read the original version by our correspondent here.

Industry stance ahead of Budget 2027

As reported by The Edge Malaysia, the stance follows Prime Minister Datuk Seri Anwar Ibrahim's statement that the government will announce more decisive wage measures in Budget 2027, which is scheduled to be presented on 9 Oct.

FMM President Jacob Lee Chor Kok said employers recognise the need for better wages, but companies differ in their ability to absorb rising wage costs. He said many large firms already pay above the statutory minimum wage, while smaller manufacturers and labour-intensive businesses have less room to absorb sudden increases in payroll costs.

FMM also stressed that the profits of a small number of highly successful companies should not be regarded as representative of the entire business community. The association cited figures from SME Corporation Malaysia showing that micro, small and medium-sized enterprises accounted for 96.1% of business establishments in 2024.

Cost impact on hiring and operations

According to FMM, sudden and uniform adjustments could also affect wage structures above the minimum level, as employers may need to revise pay for experienced operators, technicians and supervisors to maintain differentials based on skills, experience and responsibilities.

The association said it supports wage growth linked to improvements in worker productivity, skills and business performance. At the same time, manufacturers still need to invest in machinery, technology, training and production capacity while managing the costs of materials, energy, transport and financing.

FMM said companies reporting strong and sustainable profits should consider whether workers also share in those gains through better wages, bonuses, skills development and career advancement opportunities. However, if minimum wage increases exceed companies' ability to bear higher wage costs, some manufacturers may reassess pricing, hiring or production plans, although their ability to pass on additional costs to customers remains limited by competition and customer contracts.

FMM added that consultations among workers, employers and the government are essential to achieve a minimum wage rate that raises incomes, recognises workers' contributions and at the same time preserves business viability.

In our previous article on the boom in artificial intelligence (AI) investment in the U.S., we examined how massive spending on data centres and AI infrastructure has begun putting pressure on technology component prices and electricity consumption. We also highlighted public concerns about AI's impact on jobs, along with additional inflation risks as demand for chips and energy rises.

Source of article: tradersunion.com