Low Profits Hamper Kelantan Businesses from Paying Fair Wages

Businesses in Kelantan, Malaysia, are struggling to pay their employees fair wages due to razor-thin profit margins, according to Dr. Mohd. Fazlan Ghazali, director of the Kelantan Malay Chamber of Commerce.

He explained that fierce price competition compels many traders to offer products at the lowest possible prices to attract customers. This practice significantly shrinks profits, limiting employers' ability to increase salaries. "If everyone competes on price, profits won't be large. When profits are small, how can employers provide better minimum wages to workers?" Ghazali stated.

“

If everyone competes on price, profits won't be large. When profits are small, how can employers provide better minimum wages to workers?

While Kelantan has a lower cost of living compared to other Malaysian states, leading to cheaper goods, this economic reality impacts traders' earnings. Recent data from the Department of Statistics showed Kelantan, along with Perlis and Sabah, recorded the lowest median monthly wages in Malaysia, at RM1,827, RM1,855, and RM2,082 respectively.

“

The problem now is there are more businesses than buyers. Businesses that are still operating are in the essential goods sector like food, groceries, chicken, fish, and meat.

Ghazali noted that many businesses wish to offer the best services and products but are hampered by the current economic climate. Low consumer purchasing power forces people to be more cautious with spending, further restricting business growth. "The problem now is there are more businesses than buyers. Businesses that are still operating are in the essential goods sector like food, groceries, chicken, fish, and meat," he observed.

He added that only companies with high profit margins, such as gold shops, can afford to offer better salaries. Small and medium enterprises, reliant on slim profits, face pressure from operating costs like rent. "If customers don't come to buy, how can they survive? That's why not all employers can afford to pay high wages. External factors like rising prices put pressure on the economy, and Kelantan needs more investment opportunities to stimulate economic activity," Ghazali concluded.

“

External factors like rising prices put pressure on the economy, and Kelantan needs more investment opportunities to stimulate economic activity.