Sabah Employers Concerned Over RM1,700 Minimum Wage Implementation

Sabah Employers Association (SEA) President’s Frustration

Sabah Employers Association (SEA) president, Yap Cheen Boon, expressed his frustration with the imminent RM1,700 minimum wage announced in Budget 2025. He highlighted that this salary increase would further strain Sabah businesses that are already grappling with the Sabah Labour Ordinance (SLO) amendments recently passed in Parliament.

Impact on Sabah Businesses

Yap Cheen Boon pointed out that the wage hike, set to take effect on February 1, 2025, along with the SLO amendments, could lead to a significant increase of more than 21% in labor costs for micro, small, and medium businesses in Sabah. Additionally, he mentioned that this cost escalation could trigger further wage rises for experienced or senior workers in companies, ultimately adding to the financial burden on businesses.

Federal-Centric Mindset vs. Sabah’s Reality

Yap Cheen Boon criticized the decision to base the minimum starting wages for skilled jobs in Sabah on Peninsular Malaysia standards, emphasizing that it demonstrates a federal-centric mindset that overlooks Sabah’s unique challenges. He argued that this approach might discourage struggling Sabah firms from hiring unemployed skilled workers due to the potential increase in labor costs.

SUCCC President’s Take on Budget 2025

Sabah United Chinese Chambers of Commerce (SUCCC) president, Datuk Michael Lui, echoed similar sentiments regarding the implications of the minimum wage increase announced in Budget 2025. He expressed concerns about how this move, paired with the upcoming enforcement of the Progressive Wage Policy, could affect the business community in Sabah.

Prime Minister’s Announcement on Minimum Wage Increase

During the Budget 2025 presentation, Prime Minister Datuk Seri Anwar Ibrahim revealed that the minimum wage would be raised to RM1,700 from RM1,500 per month starting February 1. Employers with fewer than five employees were given until August 1 to comply with the new minimum wage guidelines.

Analysis of the Situation

• Potential Benefits: A RM200 increment per worker in Sabah could benefit approximately 500,000 salaried workers, leading to an additional spending power of RM1.2 billion per year, equivalent to 1.4% of Sabah’s GDP.
• Challenges Ahead: Despite the perceived economic gains, there are concerns about potential price rises in goods and services that could offset the benefits of the wage increase.
• Unemployment Issue: Sabah’s high unemployment rate of 8.71% (equivalent to 181,500 individuals) is attributed to a decline in the number of businesses and an oversupply of low-skilled workers in the state.

  In conclusion, the implementation of the RM1,700 minimum wage in Sabah has sparked debates and raised apprehensions among employers about its impact on businesses and the economy. It is crucial for stakeholders to engage in constructive dialogue to address the concerns raised and find sustainable solutions that benefit both employers and workers in Sabah.