Wan Choon How, managing director of water engineering company Howern Wasser, said: “We are not opposed to an increase. To a certain extent, it’s a good measure.”

However, such increases should be implemented gradually. An increase in the minimum wage or employers’ EPF contribution rate without a raise in productivity would come at the expense of profit, he said.

Employers are currently required to contribute 13% for those earning RM5,000 and below, and 12% for those earning above RM5,000. Employees contribute 11%.

Labour leaders have called for the employer contribution to be increased to 20%. On May 1, Prime Minister Anwar Ibrahim said the Cabinet would discuss calls for an increase in the rate.

Muhamad Nizam Kassim, owner of chicken supplier MNK Global Resources, said the increase in employer contribution must result in a “win-win situation” for both employers and employees.

“It cannot be increased drastically. When employers feel burdened, there is a high chance they will hire fewer workers and may even end up firing some,” he told FMT.

SME Association of Malaysia president Ding Hong Sing said raising the EPF contribution would cause businesses to pass their increased operating costs to consumers.

“If EPF contributions are raised, prices of goods will surely increase. Retail product prices will rise because overheads will have increased,” he said.