Steven Sim: Wage subsidies can help SMEs raise salaries

KUALA LUMPUR: Entrepreneur and Cooperatives Development Minister Steven Sim wants the government to consider wage subsidies to help small and medium enterprises (SMEs) raise salaries without bearing the full cost.

He said efforts to raise wages should be accompanied by government support to help businesses improve productivity, strengthen workforce training and invest in technology and digitalisation.

Sim said responsibility for raising wages should be shared between employers and the government.

He said the government should play an active role in helping SMEs move towards higher pay.

"The government should step in to encourage and reward businesses that are prepared to improve productivity, strengthen training, and invest in technology and digitalisation, including through wage subsidies," he said at the EY Entrepreneur Of The Year 2026 Malaysia Top Nominees Announcement today.

Sim cited the Progressive Wage Policy introduced during his tenure as human resources minister as an example of a shared-responsibility approach.

Under the policy, employers were encouraged to voluntarily raise salaries while the government subsidised part of the increase.

He said Malaysia must continue raising wages to attract and retain talent, particularly as businesses compete for skilled workers and younger Malaysians seek better-paying jobs.

He said higher wages could not be achieved through legislation alone, adding that wage growth must go hand in hand with productivity gains.

"If we push the market beyond its capacity, businesses may go out of business.

"If wages rise without productivity gains, businesses will eventually pass the higher costs on to consumers, and that leads to inflation. But if productivity rises and wages do not follow, then we will lose talent," he said.

Sim said wage growth should not be treated as a zero-sum contest between employers and workers.

Businesses must remain profitable, he said, but when they perform well, the gains should also be shared fairly with employees.

Sim's call comes as the government considers a possible increase in the minimum wage.

Economy Minister Akmal Nasrullah Mohd Nasir had said the government was considering the impact on employers, particularly SMEs, and the need to balance workers' welfare with business sustainability.

On Saturday, Prime Minister Datuk Seri Anwar Ibrahim said wage growth had lagged behind productivity growth in Malaysia.

He said the government would introduce measures to ensure fairer wages in Budget 2027.