Malaysia will raise its minimum wage from RM1,700 to RM2,000 a month, effective June 2027, Malay Mail reported after Budget 2027 was tabled in the Dewan Rakyat on Friday (9 October).
More than four million workers fall under the new rate. Prime Minister Datuk Seri Anwar Ibrahim exempted micro, small and medium enterprises with annual sales below RM50 million, giving those businesses time to adjust their business models, The Star noted.
“The gap between workers’ productivity and wages must be narrowed, as the cost-of-living burden stems from incomes failing to keep pace with rising prices,” Anwar told the Dewan Rakyat. “This means more than four million workers will be covered by the new minimum wage rate.”
The government will also set a minimum monthly salary of RM2,500 for semi-skilled workers and graduates as a starting point, part of a wider reform of the wage framework. Anwar said employee compensation accounts for 33.9 per cent of the country’s gross domestic product. “The minimum wage only raises the income floor for workers, while wages for skilled workers remain disproportionate to their qualifications,” he said.
Government-linked investment companies and government-linked companies committed to lifting their living wage benchmark from RM3,100 to RM3,400 a month, which benefits about 230,000 workers. Anwar welcomed the same step taken by major employers in the banking and oil and gas sectors, and urged private-sector employers to follow them.
The wider budget carries RM459.8 billion in spending, CNA said, with the fiscal deficit set to ease to 3.3 per cent next year from a revised 3.6 per cent this year. Individual income tax relief rises from RM9,000 to RM12,000, the first revision since 2010, and Anwar said the lower rates and higher relief give around five million taxpayers up to RM1,600 more in disposable income.
The government also plans to jointly fund a RM160 million package with Grab to lift net income for about 600,000 e-hailing and p-hailing workers from next year. Around 38,000 taxi drivers and 15,000 bus drivers will each receive a one-off payment of RM1,000.
The RM1,700 rate now in force comes from the Minimum Wages Order 2024, made under the National Wages Consultative Council Act 2011. It took effect for larger employers on 1 February 2025 and reached every employer in the country from 1 August 2025.
To curb the employment of undocumented foreign workers, companies other than MSMEs can claim tax deductions for salary expenses only if wages are paid through bank accounts, using the payment methods permitted under the Employment Act.
