Micro, small, and medium enterprises (MSMEs) will be temporarily exempted from any new minimum wage increase, Entrepreneur and Cooperatives Development Minister Steven Sim said on 30 September. Under SME Corporation Malaysia’s general definition, an MSME is a business with no more than 75 full-time workers, or 200 in manufacturing.
The Cabinet is still studying the new rate, and the earliest you’ll hear it is when Budget 2027 is tabled on 9 October. Amounts discussed so far include RM2,000, and the Malaysian Trades Union Congress (MTUC) has asked for RM3,100.
The Minimum Wage Stays At RM1,700 Until A New Rate Is Set
For now, the minimum wage stays at RM1,700 a month. Every employer has had to pay at least this much since 1 August 2025. By law, the minimum wage has to be reviewed at least once every two years, and the government’s longer-term target is RM3,000 a month by 2030 under the 13th Malaysia Plan.
Sim said in a statement after the weekly Cabinet meeting that the Cabinet agreed workers’ wages should keep rising. He added that the government also needs to protect local businesses, especially MSMEs, which are dealing with the higher cost of running a business.
That’s why MSMEs won’t have to pay the new rate straight away. Instead, the government plans to lift wages at these businesses in other ways, including wage subsidies under the Progressive Wage Policy (PWP). The aim is for pay to grow in line with how productive workers are.
RM1,700 Becomes RM1,501.45 After Deductions
The minimum wage is your basic pay, before allowances and overtime. What reaches your bank account is lower, because EPF, SOCSO, and the Employment Insurance System (EIS) are taken out of your payslip first. Using the current EPF, SOCSO, and EIS contribution tables, a worker on exactly RM1,700 takes home RM1,501.45.
You may also see a small deduction for Lindung 24 Jam, SOCSO’s new cover for accidents outside work, unless you opted out before 31 August 2026. No income tax is taken at this pay level.
A higher minimum wage won’t all reach your pocket either. If the rate went up to RM2,000 (one of the amounts being discussed, not a confirmed rate), take-home pay would be RM1,766.35. That’s RM264.90 more each month, and RM33 more would go into your EPF.
Small Employers Got Extra Time In 2022 And 2025
When the minimum wage rose from RM1,500 to RM1,700 on 1 February 2025, employers with fewer than five workers could keep paying RM1,500 until 31 July 2025. Their workers only got RM1,700 from 1 August 2025, six months after everyone else, under the Minimum Wages Order 2024.
In 2022, when the rate went up to RM1,500, the government also called its exemption an MSME exemption. The minister in charge later clarified that it only covered micro businesses. These employers were first given until the end of 2022, which was later extended to 1 July 2023. In both 2022 and 2025, employers in professional fields, such as doctors and lawyers, had to pay the new rate on time, however few staff they had.
Progressive Wage Subsidies Go To Your Employer
The PWP is a voluntary programme for MSMEs. Employers who join and raise pay in line with government guidelines can get a monthly payment from the government for 12 months. It’s up to RM200 for each worker in their first year in the job, and up to RM300 for each worker who’s been there longer.
The money goes to your employer, not straight to you. It only applies if your company has signed up, and it covers full-time Malaysian workers earning below RM5,000 a month who complete the required training. Because the PWP is voluntary, it can’t guarantee you a raise the way a minimum wage law does.
Business groups welcomed the exemption but want more help. SME Malaysia asked for bigger subsidies, wider coverage, and a simpler application process. The Small and Medium Enterprises Association of Malaysia (Samenta) said the decision would protect the livelihoods of 1.3 million SMEs, and asked for low-interest loans to help businesses cover daily costs and higher wages.
Budget 2027 May Show When Your Pay Goes Up
Until the new rate and the exemption rules are announced, nobody can say exactly when your pay will go up. Budget 2027 on 9 October may tell you the new rate, when it starts, how long the MSME exemption lasts, and whether it covers all MSMEs or only micro businesses.
If you earn the minimum wage now, keep planning your monthly budget around your current pay until the new rate and its start date are confirmed. Economists have said city workers need RM3,000 a month to cover basic living costs, the same amount the government is aiming for by 2030.
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