Malaysia’s RM2,000 minimum wage follows a comprehensive study costing up to RM1.5 million, with poverty, inflation, productivity and wage data assessed.
PUTRAJAYA: The government’s decision to raise the minimum wage to RM2,000 from June 2027 is backed by economic research, wage data and consultations with employers and workers, said National Wages Consultative Council (MPGN) chairman Tan Sri Zainal Rahim Seman.
He said the review involved an allocation of between RM1 million and RM1.5 million for a comprehensive study to determine an appropriate wage rate, taking into account the country’s economic conditions and workers’ purchasing power.
“The proposed rate is not based on arbitrary figures, but on research conducted by academics and consultants to ensure it is reasonable and does not place an excessive burden on any party,” he told reporters after a press conference on the 2027 Minimum Wage Order here today.
Zainal said the study considered several indicators, including the poverty line income, median wages, Consumer Price Index, labour productivity growth and gross domestic product growth.
“The findings were analysed using a formula and compared with wage policies in other countries to assess Malaysia’s position.”
He said 21 engagement sessions had also been held nationwide, including discussions with employers, workers and trade unions, to ensure their concerns were taken into account when determining the revised rate.
Zainal said the review aimed to ensure workers received fair compensation that reflected their living costs and purchasing power, while also taking into account employers’ capacity to absorb higher labour costs.
He said the government also hoped employers who could afford to pay the higher rate would do so to improve workers’ welfare, even where exemptions applied.
He added that increasing workers’ share of national income remained a key priority, with the government aiming to raise the share of employee compensation to 40% by the end of the 13th Malaysia Plan, from about 32% to 33% currently.
He said the decision reflected the need to balance workers’ demands for fairer wages with employers’ concerns over operating costs.
“If Malaysia wants to become a developed, high-income nation, we cannot afford to be left behind,” he said.
Zainal also highlighted the need for clearer starting salary guidelines for private-sector jobs, particularly for graduates and new entrants to the workforce.
He said the government had begun a comprehensive study on private-sector starting salaries to provide employers with clearer guidance and promote fairer pay across states, including Sabah and Sarawak.
He added that without such guidelines, wage disparities between states and local authorities could encourage workers to move to areas offering higher salaries, potentially creating imbalances in regional development.