Potential measures to raise wages under Budget 2027 should be manageable for most Malaysian listed companies, although consumer, glove and plantation companies could face greater earnings pressure if wage floors are increased, according to Kenanga Research.
In its latest market strategy report Kenanga said its review of selected listed companies showed median labour cost per employee had risen by about 6% year-on-year, slightly ahead of Malaysia’s median wage growth of 5.3% in 2025. It also found that wage growth in most sectors had generally kept pace with productivity, with construction being a notable exception.
The assessment comes after Prime Minister Datuk Seri Anwar Ibrahim said the government would announce firmer measures in Budget 2027 to address wages and ensure pay better reflects qualifications and productivity. Budget 2027 is scheduled to be tabled on Oct 9.
Kenanga stressed that details of any new wage measures have yet to be announced, making the eventual impact dependent on their scope and implementation.
Malaysia’s labour productivity per employee grew 4.9% year-on-year in the second quarter of 2026, while the 13th Malaysia Plan targets annual labour productivity growth of 3.6% between 2026 and 2030.
Consumer Companies Show Wide Variation
Kenanga estimated that, among the consumer companies it analysed, every RM100 increase in the minimum wage could reduce forward earnings by between 0.13% and 2.74% before mitigating measures.
99 Speed Mart was among the least exposed, with fewer than 3% of its workforce currently earning the minimum wage, giving an estimated earnings impact of just 0.13% for every RM100 increase.
By comparison, AEON could face a larger estimated 2.74% earnings impact, as Kenanga estimated around 40% of its workforce could be affected.
MR DIY’s estimated earnings impact was 0.75%, QL Resources 0.92%, while Farm Fresh and Fraser & Neave were estimated at 0.50% and 0.30%, respectively. Nestlé Malaysia and Padini were seen as relatively insulated as their employees generally earn above the minimum wage.
Kenanga noted that previous wage increases typically translated into around a 1%-2% impact on corporate earnings after taking into account companies’ ability to pass on higher costs.
Higher wages could also provide an offset through stronger consumer spending. The research house noted that MR DIY had previously recorded an additional 1%-2% in revenue following the last minimum-wage increase.
Glove Makers More Sensitive
Glove manufacturers appear more exposed because labour accounts for around 10%-13% of their production costs.
Assuming companies cannot pass on the additional cost, Kenanga estimated a RM100 monthly minimum-wage increase could reduce earnings at Top Glove by about 5%, Hartalega by 4% and Kossan by 3%.
However, the research house said glove manufacturers had historically managed to pass higher wage costs through to customers. It estimated an increase of about US$0.20 per 1,000 pieces in average selling prices could offset each RM100 monthly increase in the wage floor.
Automation and workforce optimisation should also help moderate the impact, with manufacturers increasingly investing in digitalisation and labour-saving technology.
Plantation companies occupy a middle ground. Kenanga estimated an equivalent RM100 increase in the wage floor could lift Malaysian operating costs by about 2% and reduce pre-tax profit by around 3%, based on the Malaysian exposure of SD Guthrie, Kuala Lumpur Kepong and IOI Corp.
Technology companies, particularly electronics manufacturing services players, have historically been more successful at passing higher labour costs to customers during contract negotiations, while REITs and industrial companies were also viewed as relatively insulated.
Kenanga said the eventual corporate impact will depend on the mechanism adopted in Budget 2027, but its analysis suggests any broad wage increase would create uneven pressure across sectors rather than a uniform hit to listed-company earnings.
