Kuala Lumpur: The government has agreed to raise the minimum wage rate from RM1,700 to RM2,000, effective June 2027, a move that will benefit more than four million workers.
Prime Minister Datuk Seri Anwar Ibrahim said micro, small, and medium enterprises (MSMEs) with sales revenue below RM50 million are exempted from implementing the new rate to allow them time to adjust their business models.
He said the measure was aimed at narrowing the gap between productivity and wages, particularly as workers’ incomes had not kept pace with rising commodity prices.
Anwar, who is also Finance Minister, said the government would also reform the wage framework by introducing a starting minimum wage of RM2,500 a month for semi-skilled positions and graduates.
“The minimum wage rate merely raises the income floor for workers, whereas the wages of skilled workers remain disproportionate to their qualification levels.
“The share of employee compensation in Malaysia’s Gross Domestic Product (GDP) remains low at 33.9 per cent,” he said while tabling the 2027 Budget in the Dewan Rakyat today.
Anwar also said the government welcomed the commitment by government-linked investment companies (GLICs) and government-linked companies (GLCs) to raise the living wage benchmark from RM3,100 to RM3,400 a month, benefiting 230,000 workers.
He urged private sector employers to follow suit by offering fairer wages, as already practised by employers in key sectors such as banking and oil and gas.
Meanwhile, to curb the employment of undocumented foreign workers, Anwar said companies other than MSMEs would only be eligible to claim tax deductions for wage expenses if payments were made through bank accounts, in accordance with the channels permitted under the Employment Act 1955.
However, the requirement would not apply to tax deductions for other expenses.
