Johor’s businesses are facing tough times, with orders falling by at least half compared to pre-pandemic levels, as they grapple with the proposed minimum wage hike to RM1,700 per month.
The South Johor Foundry and Engineering Industries Association president, Lim Kok Kiong, has called on the government to delay implementing the increase, originally set for February 1. Lim explained that many businesses anticipated economic recovery after the lifting of Covid-19 restrictions and invested in new machinery in preparation for growth. However, orders have yet to return to pre-pandemic levels, even after more than three years.
The manufacturing sector, including industries like plastics, electronics, and metal parts, relies heavily on foreign labor—making up as much as 80% of the workforce in some cases. While the association supports better wages for workers, Lim stated, “It is not the right time for this increase.” He highlighted that many local workers already earn over RM1,700 in basic pay but that employers also bear the costs of accommodation, meals, and transportation for foreign workers, pushing their monthly expenses to over RM2,000 per worker.
Training Challenges and Workforce Turnover
Johor Baru Traders and Hawkers Association president Roland Lim voiced similar concerns, stating that a minimum wage of RM1,700 for unskilled workers is unfair to employers. He noted that many new foreign workers lack the skills or experience needed for their roles, requiring significant investment in training.
“Business owners spend time and money training them, but many workers struggle to adapt. Some threaten to quit or complain to their agents if reprimanded for mistakes,” said Roland. He added that by the time these workers are fully trained, their two-year permits often expire, forcing them to return to their home countries.
Roland proposed extending foreign worker permits to three to five years to address this issue. “At this rate, Malaysia is becoming a ‘training ground’ for skilled workers who then contribute to their home or other countries’ economies,” he said.
A Snowball Effect on Costs
Business groups fear that raising the minimum wage will create a domino effect, increasing the cost of goods and services. “This increase will add more pressure on businesses already struggling with rising expenses,” said Roland.
The Johor Baru Traders and Hawkers Association plans to bring these concerns to the Human Resources Ministry, urging reconsideration of the wage hike.
Government’s Position
The wage increase to RM1,700 per month was announced by Prime Minister Datuk Seri Anwar Ibrahim during Budget 2025. Employers with fewer than five employees have been granted a six-month grace period, with the new rate taking effect on August 1 for these businesses.
While the intention behind the minimum wage hike is to improve workers’ livelihoods, businesses in Johor argue that timing is crucial. For now, they hope for a balanced approach that addresses both workers’ needs and the economic realities faced by employers.
Recent Comments