The proposed RM2,500 minimum wage for graduates under the 2027 Budget—slated for June next year—could be feasible. But if badly handled, it could be counter-productive.
The Malaysian Employers Federation, while agreeable to the new wage structure, suggested a thorough study before making it mandatory. The Human Resources Ministry is preparing basic salary guidelines.
So, how realistic is this RM2,500 minimum wage? At a glance, it is well-suited for technical and professional roles, such as engineering, semiconductors, banking and accounting, as well as information technology fields like artificial intelligence, software programming and data analytics.
Larger employers could accommodate this rate for their management trainee programmes. It is harder though, for small businesses, nonprofit organisations and cash-conscious start-ups.
A degree is no guarantee that a fresh graduate will immediately generate RM2,500 in economic value. However, employers should first recognise these qualifications and invest in developing inexperienced hires to ensure a fairer return on education and skills.
Economically, a guaranteed minimum wage provides relief as rising costs weigh heavily on fresh graduates.
Companies cannot exploit inexperienced and fresh graduates. The new floor wage should incentivise employers to invest in productivity, technology and skills development rather than relying on cheap labour.
Even so, the opposite could happen after June 2027. Some employers may shift away from hiring fresh degree holders—opting instead for diploma holders, experienced workers or those with postgraduate degrees—for entry-level roles.
Meanwhile, smaller companies unable to justify the higher starting salaries may cut graduate training positions altogether.
To circumvent the policy, companies may choose to automate tasks, delay expansion or turn to temporary and contract staff.
Current employees earning RM2,500 or more may demand higher salaries, increasing payroll costs. Graduates with limited experience may be priced out of their first jobs, thus defeating the policy's purpose.
The government may need to consider wider exemptions, particularly when the general RM2,000 minimum wage becomes a complicated framework.
While these risks are not inevitable, their outcome hinges on how the government designs the policy, which currently exempts companies with annual sales under RM50 million, alongside the overall wage floor.
The RM2,500 minimum wage, if implemented carefully, can improve income, make qualifications financially worthwhile and boost investment in skilled jobs.
Above all, the government must solve the mismatch between qualifications and actual skills required.
The policy's success may well depend on graduates securing productive roles and driving sustainable wage growth.
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