Malaysia reviews RM1,700 minimum wage as cost-of-living mount

Malaysia is reviewing its RM1,700 monthly minimum wage, with the government weighing employees’ living costs, wage levels and employers’ ability to pay as it assesses whether the current rate remains appropriate.

Human Resources Minister Datuk Seri R. Ramanan said the review would consider indicators including the Poverty Line Income, median wage, Consumer Price Index (CPI), labour productivity and unemployment rate.

Speaking to Utusan Malaysia, Ramanan said these indicators would help the government assess employees’ basic needs while taking into account employers’ capacity to absorb higher labour costs.

The review comes as employee representatives call for a wage policy to better reflect rising living expenses. UNI Malaysian Labour Centre (UNI-MLC) president Datuk Mohamed Shafie BP Mammal said fluctuations in the cost of food, housing, transportation and education were putting pressure on employees’ purchasing power, particularly those on lower incomes.

“The more important question is what they can afford with that wage and whether it is sufficient for them to meet their families’ basic needs,” he said in a statement.

Shafie stressed that a review did not mean the minimum wage should automatically be increased. Instead, he said, it should give the government, employers and employee representatives an opportunity to assess economic conditions and determine whether the existing rate remained relevant.

Ramanan said the government had not conducted a specific study on a living wage, although Bank Negara introduced the concept in 2018. At the time, it estimated that a single individual in Kuala Lumpur would require about RM2,700 a month for a living wage.

He also pointed to the Department of Statistics Malaysia’s Decent Living Expenditure measure, which accounts for factors such as location, household demographics, and actual spending patterns.

The 13th Malaysia Plan also outlines labour market reforms aimed at accelerating wage adjustments, including through minimum wage reviews that consider living wage concepts.

The current RM1,700 minimum wage took effect in August 2025 and is reviewed every two years.

Beyond the minimum wage, Ramanan said the government was using the Progressive Wage Policy to encourage wage growth based on employees’ skills and productivity. The policy is intended to move Malaysia away from a wage structure centred solely on a minimum pay floor.

READ MORE: Malaysia urged to review wage structure beyond minimum pay to support income growth

As of latest figures, 5,910 employers had applied to participate in the Progressive Wage System. Of these, 4,025 employers, or 68.1%, had raised employees’ wages and submitted claims for government incentives.

The programme has benefited 51,363 employees, exceeding its initial target of 50,000. The government has disbursed more than RM73 million in progressive wage incentives, including RM10.2 million for entry-level employees and RM62.9 million for non-entry-level employees.

Ramanan said wage increases under the policy were linked to employees’ participation in recognised upskilling programmes, allowing the initiative to support higher pay and productivity growth.

He added that the ministry was encouraging employers to adopt the Productivity-Based Wage System and strengthen union-based wage models through collective agreements.

For Shafie, however, protecting employees’ purchasing power should remain central to the wage review, particularly as employees need sufficient income not only to cover daily necessities but also to manage emergencies, healthcare, education and savings.

“We are not talking about luxury, but about being able to live a decent life through the fruits of their own labour,” he said, reported New Straits Times.