KUALA LUMPUR, Oct 25 — While tabling Budget 2025, Prime Minister Datuk Seri Anwar Ibrahim announced that the minimum monthly wage in Malaysia will be increased to RM1,700.
Some facts about this announcement:
- The minimum wage will be mandatory by February 1, 2025.
- For companies with fewer than five employees, this would be delayed by six months to August 1, 2025.
- This was an increase from RM1,500, which was set in May 2022.
- RM1,700 is the floor wage rather than target salary for new hires.
This was not the first time that Malaysia has mandated, and increased its minimum wage through a Minimum Wage Order, which was first issued in 2013.
Since 2020, both East and West Malaysia implement the same minimum wage.
The Minimum Wage Order was introduced following the enactment of the National Wages Consultative Council Act 2011, which established a council — the NWCC — to advise the federal government on the matter.
Why did Putrajaya raise the minimum wage?
Last week following the announcement, Human Resources Minister Steven Sim said this is a part of a mechanism to cater for the welfare of workers, particularly low-income earners, and will be uniform across the country.
Sim said this move will ensure the welfare of workers, particularly those with low incomes, while prioritising the public and elevating their dignity.
He also said that this new rate was unanimously agreed upon by representatives of employers, workers, and the government in the NWCC.
How does this compare with other countries?
With this raise, Malaysia’s minimum wage is the highest among its regional neighbours. However, it is still low in value compared to developed economies in East Asia.
It should be noted that not all countries in Southeast Asia mandate a minimum wage. Singapore, for example, does not have one.
Minimum wages are also determined in different ways according to countries. For example, Switzerland does not have a national rate, and it is set by each canton or subdivision of the country.
Some countries define their minimum wages according to type of jobs, such as India, with different rates for skilled and semi-skilled workers.
Meanwhile, the United Kingdom, Republic of Ireland and the Netherlands take into account an employee’s age.
Is RM1,700 actually enough for Malaysian employees?
When compared to the top employing countries, Malaysia’s minimum wage may pale in comparison — but do not be fooled by the numbers.
At a GDP per capita of US$11,691 (RM50,855), the minimum wage of RM1,700 is at around 3 per cent of the figure.
This is comparable to the top countries — where the minimum wage is around 3 and 4 per cent of their own GDP per capita.
Only Switzerland offers at a slightly higher ratio of 5 per cent compared to its GDP per capita.
