Chong Yoong Wen, an economist with think tank Bait Al-Amanah, said raising the minimum wage would see funds intended for investment into improving productivity go to paying increased salaries instead.
As a result, he said the policy would impact the scalability of businesses in the country, especially since 90% of them are micro, small and medium enterprises (MSMEs).
“As labour costs rise, cost-push inflation (an overall price increase resulting from higher wages and raw materials) may occur. This coincides with the weak ringgit, which affects the importation of raw materials,” said Chong.
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