FMM Sabah raises alarm over amended Labour Ordinance, cites strain on SMEs
KOTA KINABALU (May 9): The Federation of Malaysian Manufacturers (FMM) Sabah branch has voiced strong concerns over the amended Sabah Labour Ordinance 2025 that took effect on May 1, just three months after the implementation of the Minimum Wages Order 2024.
The branch, which largely comprises Small and Medium Enterprises (SMEs), said manufacturers are struggling to absorb the rising production costs without affecting profitability.
FMM Sabah chairman Liaw Hen Kong said employers acknowledge the government's need to align with the International Labour Organisation (ILO) Declaration on Fundamental Principles and Rights at Work 1998 to improve Malaysia's image and attract both local and foreign investors.
However, he stressed that any changes should be balanced and consider the realities of the regional economy that benefits both employers and employees while promoting better work-life balance and humane working conditions.
'The reduction in the standard workweek poses serious challenges for manufacturers operating around the clock, especially SMEs that still rely heavily on manual and semi-automated processes,' he said in a statement.
He pointed to several measures introduced under the amended ordinance, including the reduction of the standard workweek, extension of maternity leave from 60 to 98 days, and the expansion of coverage to include all workers regardless of salary or job and seven days of paid paternity leave
'These changes will reduce available man-hours, lower productivity and output, and increase operational and production costs,' he said.
He added that these pressures are worsened by the national Minimum Wages Order 2024, which raised the minimum monthly wage to RM1,700 from Feb 1.
As a result, many businesses have frozen hiring to contain costs and are passing the burden on to consumers who are already struggling with a higher cost of living, he said.
He also cited external pressures such as rising geopolitical tensions, including US reciprocal tariffs on selected Malaysian exports, which are affecting the competitiveness of local products.
'Combined with global trade tensions, supply chain disruptions, and price volatility, these factors are placing immense pressure on manufacturers particularly SMEs who are already grappling with rising domestic costs and limited financial buffers,' he said.
FMM expressed disappointment over the government's decision to proceed with the changes despite collective objections and proposals submitted to the Ministry of Human Resources (MOHR) by trade associations as early as April 22, 2019.
'These proposals highlighted Sabah's unique circumstances and called for more dialogues between stakeholders and MOHR, but unfortunately, they were met with apathy,' he said.
Nonetheless, FMM Sabah supports the establishment of the Sabah Labour Advisory Council (SLAC) under the Ministry of Science, Technology and Innovation (KSTI) as a useful platform for trade associations and the Government to engage on labour-related matters.
Liew urged the council to convene follow-up meetings without delay so stakeholders can collectively address issues arising from these amendments and ensure Sabah's labour laws are aligned with its unique economic landscape.
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