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Malaysia has implemented a new minimum wage of RM1,700 effective February 1, 2025, which benefits 4.37 million workers.1 While this wage adjustment is expected to improve low-income groups’ standard of living, it also presents challenges for businesses operating costs.
Improve Low-Income Workers’ Welfare
Higher wages mean more disposable income, which can lead to increased consumer spending and better financial stability for families. Increased minimum wage rates also increase morale and productivity when employees feel valued and fairly compensated. In Malaysia's cleaning industry, where labour conditions can be demanding, better wages can also reduce turnover rates, fostering a more stable workforce.
Challenges for the Cleaning Industry
While the new minimum wage is a positive development for workers, it presents challenges for businesses, particularly in cleaning industry. Many cleaning service providers operate on thin profit margins, often competing on price to secure the cleaning contracts. With labour costs forming a substantial portion of operational expenses, the wage increase could force businesses to reassess their pricing strategies.
Some potential challenges include:
A higher minimum wage can stimulate economic growth by boosting consumer spending, as workers have more money to spend on goods and services. However, businesses may respond to increased labour costs by raising prices, potentially contributing to inflation.
Striking a balance between fair wages and business sustainability will require collaboration, innovation, and proactive policy measures to ensure a thriving and equitable economic landscape for all stakeholders. Policy makers could introduce tax reliefs or subsidies for labour-intensive industries to help SME businesses cope with the transition. Businesses need to phase in wage increases gradually to allow time for financial adjustments.
As Maclean adapt to these changes, we remain committed to operational sustainability and maintaining service quality. Our focus is on fostering strong relationships through balanced, transparent business practices that benefit both our clients and team.
References:
1. Federal Government Gazette. (2024, December 4). Minimum wages Order 2024.
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