Former DAP Leader Warns That Setting Minimum Wage at RM3,100 Could Push Businesses Towards AI

An RM3,100 minimum wage sounds attractive. After all, who would oppose higher incomes for Malaysian workers?

But former Democratic Action Party (DAP) leader Ronnie Liu’s warning raises a more difficult question: can businesses actually afford it?

Here are the costs if the minimum wage were set at RM3,100

Raising the minimum wage by regulation does not automatically create the productivity needed to sustain it. If labour costs rise faster than productivity, businesses will eventually look for ways to absorb the shock, and those choices could reshape the labour market, Ronnie pointed out in his Facebook post.

The RM3,100 figure stems from a proposal by the Malaysian Trades Union Congress (MTUC) to raise the national minimum wage to RM3,100 by 2030, drawing partly on Bank Negara Malaysia’s earlier findings on low-wage workers.

The first impact may be wage compression. When entry-level workers receive a substantial increase, technicians, supervisors and experienced staff will expect adjustments too. Otherwise, the wage structure loses its logic.

Then comes the broader cost squeeze. Restaurants, retailers, manufacturers and logistics companies may raise prices, reduce overtime, slow hiring, outsource work or automate tasks. For consumers, that could mean higher prices. For workers, part of the apparent wage gain could be swallowed by a higher cost of living.

Ronnie then highlighted another force that cannot be ignored: AI and automation

A job costing RM1,700 a month may not have justified investment in sophisticated automation.

At RM3,100, the calculation changes. Self-service systems, AI, robotics and digital workflows suddenly become more attractive. The outcome could be fewer workers earning more, rather than every worker earning RM3,100.

He then explained that Malaysia already has pieces of the solution. New Industrial Master Plan (NIMP) 2030 promotes productivity, progressive wages, SME financing and smart factories, while the existing Progressive Wage Policy links wage growth to productivity. The direction is right. What is missing is a unified transition plan.

Ronnie also said that the government should therefore consider a National Wage and Productivity Transition Plan, combining SME financing, AI adoption, worker retraining, productivity incentives and mechanisms to share productivity gains with employees.

“It should be to build an economy where workers can genuinely generate RM3,100, RM4,000 or RM5,000 in value, and businesses can afford to share that value.”

What do you think of Ronnie’s take on this?

Also read: “Only RM15k left” – M’sian Boss Reveals Company’s Bank Statements to Staff After Pay Complaints

Source: Ronnie Liu Tian Khiew | Facebook
Source: abdulrazaklatif | 123RF