KUALA LUMPUR, Oct 9 2026 — The government has agreed to raise the minimum wage from RM1,700 to RM2,000, effective June 2027, a move that will benefit more than four million workers.
Prime Minister Datuk Seri Anwar Ibrahim said 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.
He said the measure aims to narrow the gap between productivity and wages, particularly as household incomes have not kept pace with rising prices of goods.
Anwar, who is also Finance Minister, said the government will further reform the worker income framework by introducing a minimum wage of RM2,500 a month for semi-skilled jobs and graduates as a starting point.
“The minimum wage only raises the floor of workers’ income, while the wages of skilled workers remain incommensurate with their qualifications,” he said when tabling Budget 2027, themed “Menggapai di Langit, Mengakar di Bumi”, in the Dewan Rakyat yesterday.
He noted that employee compensation as a share of Gross Domestic Product (GDP) in Malaysia remains low at 33.9 per cent.
The government also welcomed the commitment by government-linked investment companies (GLICs) and government-linked companies (GLCs) to raise the living wage benchmark from RM3,100 to RM3,400 a month, which will benefit 230,000 workers.
Anwar called on all private employers to follow suit in offering more appropriate wages, as already practised by several major employers in the banking as well as oil and gas sectors.
Separately, to close loopholes that allow employers to hire undocumented foreign workers, he said companies other than MSMEs will only be allowed to claim tax deductions for salary expenses if payments are made through bank accounts, in line with channels permitted under the Employment Act 1955. Tax deductions for other expenses are not subject to this condition.
(Source: Bernama)
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