Businesses in Sabah are now on the brink of crisis as labor costs are expected to jump by 21% by February 2025, following the increase in the minimum wage to RM1,700 announced in Budget 2025.
This move has caused concern especially among employers of small and medium enterprises (SMEs) who are already struggling with the amendment to the Sabah Labor Ordinance (SLO).
Sabah Employers Association (SEA) president, Yap Cheen Boon, warned that employers in Sabah will be dragged into two painful choices.
They had to choose between raising the price of services and materials resulting in the loss of customers, or tightening the hiring of low-skilled workers.
These become two options that can cause a bigger crisis in Sabah's fragile economy.
Yap also slammed the decision to set the minimum starting salary based on Peninsular Malaysia standards, describing it as an unfair act and ignoring the state of Sabah.
According to him, what is appropriate in the Peninsula is not necessarily effective in Sabah, which is still struggling to recover.
Although the RM200 wage increase benefited 500,000 workers in Sabah, Yap warned that this positive effect could be destroyed when the price of goods and services also increased.
Furthermore, Sabah's current unemployment rate of 8.71%, which is almost twice the national average, means that Sabah's economy will be on the verge of destruction.
For employers in Sabah, this minimum wage issue is not just a matter of wage increases, but a matter of business continuity and the future of the state's economy.
They are now demanding that the state government be more proactive and not just follow the instructions of the center in finding a fairer solution for Sabah.
