Minimum Wage in Malaysia: An Overview

The concept of a minimum wage in Malaysia was introduced in 2011 by the government, which established and gazetted the National Wages Consultative Council Act, aimed at:

* ensuring the basic needs of workers and their families are met;
* providing them with adequate social protection;
* incentivising businesses to invest more in advanced technologies; and
* reducing dependency on foreign labour.

The minimum wage was first set in 2013 at RM900 for Peninsular Malaysia and RM800 for Sabah and Sarawak. It was then increased to RM1,000 in 2016, and to RM1,100 in 2019.

During the pandemic, the council decided to raise the minimum wage more aggressively to RM1,200 in 2020 and RM1,500 in 2022. This trend indicates the setting of a new minimum-wage level every two to three years. Most recently, it was announced during Budget 2025 that the minimum wage in Malaysia will be raised from RM1,500 to RM1,700 starting from February – a move that has been welcomed by certain quarters.

### Who does it apply to?

The minimum wage applies to nearly all employees regardless of working arrangements, as well as foreign workers. If you are in a full-time, part-time, contract, commission-based or other working arrangement, you are entitled to RM1,700 per month or RM8.17 an hour at the minimum.

There are, however, two exceptions: those who are on an internship or apprenticeship do not qualify, and you will not be eligible if you are a domestic worker.

Companies with under five employees are given six months to comply with the minimum wage. This is owing to the fact that small companies will face steeper increases in their salary costs compared with big firms.

Pros and Cons of a Minimum Wage

### Pros

* Malaysians (and foreigners) are compensated fairly: A minimum wage provides a salary floor regardless of your race, status, nationality, or other characteristics, helping you to support yourself and your family. This is important as absolute poverty rates have increased in recent years to as high as 8.4% in 2020. It stands at 6.2% as of 2022.
* Increased EPF and Socso contributions: With a higher minimum wage, the amount contributed to EPF and Socso by you and your employer will also increase. EPF is important for your retirement, while Socso provides you with coverage against working accidents and disabilities.

### Cons

* Salaries could be reduced: To pay for higher minimum wages, employers might resort to reducing the salaries of employees who earn more. This is rare, but companies that aren’t doing so well may have to make unpopular decisions that don’t violate the law.
* Employers might be more discerning: With a higher minimum wage, employers might be more selective when hiring. After all, they will face higher salary costs and might even decide to not hire if they can’t afford to.

Employed but not given minimum wage?

If you are worried about being paid the minimum wage or being a victim of employer exploitation, you can report the case to the National Wages Consultative Council and the human resources ministry. Government officials will investigate and request relevant documents from your employer. If necessary, they can even secure a warrant to enter the employer’s property to retrieve the documents.

Conclusion

A minimum wage serves as a vital safety net for Malaysians and foreigners alike, ensuring that basic needs are met and income inequality is reduced. Although there are pros and cons to this policy, its benefits outweigh its drawbacks in the long run.

Frequently Asked Questions

What is the current minimum wage in Malaysia?
The minimum wage in Malaysia is currently RM1,700 per month.

Who is entitled to the minimum wage?
Nearly all employees, including foreign workers, are entitled to the minimum wage regardless of working arrangements.

Who is not entitled to the minimum wage?
Those who are on an internship or apprenticeship do not qualify for the minimum wage, nor do domestic workers.

Is there an exception for companies with fewer employees?
Yes, companies with under five employees are given six months to comply with the minimum wage due to the larger salary increases they will have to bear.