Eight million workers set for a pay rise as Anwar moves to close the gap between productivity and pay, but smaller MSMEs are exempted
| IN BRIEF: Minimum wage up from RM1,700 to RM2,000 a month from June 2027 New RM2,500 minimum for semi-skilled workers and graduates MSMEs with annual sales below RM50 million exempted GLIC and GLC living wage benchmark raised to RM3,400 |
By TENGKU NOOR SHAMSIAH TENGKU ABDULLAH
KUALA LUMPUR, Oct 9: The national minimum wage will rise from RM1,700 to RM2,000 a month from June 2027, benefiting eight million workers, Prime Minister Datuk Seri Anwar Ibrahim announced when tabling Budget 2027 in the Dewan Rakyat today.
Micro, small and medium enterprises (MSMEs) with annual sales below RM50 million will be exempted from the new rate, to give them room to adjust their business models.
Anwar, who is also Finance Minister, went further, announcing that the government will reform the workers’ income framework, beginning with a minimum wage of RM2,500 a month for semi-skilled workers and graduates.
“We acknowledge that the minimum wage provides a necessary floor for workers’ incomes, but it does not address the wider issue of wages that do not adequately reflect the skills and qualifications of our workforce,” he said.
He said narrowing the gap between productivity and wages must remain a priority, pointing out that labour compensation makes up only 33.9 per cent of Malaysia’s gross domestic product (GDP).
“The pressure on the cost of living becomes an increasingly heavy burden when income growth fails to keep pace with increases in the prices of goods,” he said.
GLCS SET THE PACE
Government-linked investment companies (GLICs) and government-linked companies (GLCs) have committed to raising their living wage benchmark from RM3,100 to RM3,400 a month, a move expected to benefit 230,000 workers.
Anwar noted that several employers in key sectors, including banking and oil and gas, had also set more decent wage levels, and called on private-sector employers “to follow suit and play their part in ensuring that workers receive fairer remuneration”.
CURBING UNDOCUMENTED LABOUR
To curb the employment of undocumented foreign workers, companies other than MSMEs will only be able to claim tax deductions on wage expenditure if wages are paid through bank accounts permitted under the Employment Act 1955. Tax deductions for other expenditure are not affected.
GIG WORKERS NEXT
For the estimated 600,000 Malaysians working as e-hailing and p-hailing drivers, the Gig Workers Consultative Council is negotiating a minimum income rate, an income formula and minimum social protection standards, due to be finalised in early 2027.
Pending that, the government and Grab Holdings Limited will share the cost of a RM160 million package from 2027, which is expected to lift median net monthly income by up to RM227 for e-hailing drivers and up to RM100 for p-hailing delivery workers.
The wage measures sit under the first of eight Foundations in Budget 2027, “Reaching for the Skies, While Anchored on Our Values”, which leads with the cost of living. The budget has total resources of RM510 billion.
- TNS NEWS