Minimum wage in Malaysia dictated by progressive wage system

Private employers are encouraged to focus on fair compensation for skilled employees to raise the productivity of the country’s workforce.
By: | August 29, 2023
Topics: Compensation and Benefits | Compliance | Employment Law | Malaysia | News

The Malaysian government remains steadfast in its decision to uphold the RM1,500 (US$322.34) minimum wage within the framework of the progressive wage system, according to V. Sivakumar, Minister of Human Resources of Malaysia.

The progressive wage system, coupled with the RM1,500 minimum wage, aims to elevate workforce productivity while benefitting employers. Sivakumar said, “The minimum wage of RM1,500 is the baseline. If we lower the minimum wage figure, that is not progressive, but regressive.”

Rafizi Ramli, Minister of Economic Affairs of Malaysia, confirmed the cabinet’s approval of the progressive wage policy, with detailed plans expected to be unveiled during the 2024 Budget in October. The implementation of the policy is projected to follow soon after.

Sivakumar also highlighted the flexibility of the progressive wage system, indicating that private employers are not mandated to adopt it, and explained, “When we set RM1,500 as the minimum wage, it does not involve the issue of productivity, therefore we want skilled and talented employees to be paid commensurately immediately, becoming an added value and asset to their employer to stay employed.”

“In time to come, employers will gradually realise the need to implement progressive wages. So, for the initial stage, we will let employers decide whether they want to use the progressive wage system.”

READ MORE: Malaysia considers progressive wage policy to raise salaries 

Sivakumar also divulged plans to explore the formulation of the Salary Advertisement Act. This proposed legislation would necessitate employers to disclose salary scales for advertised job positions, enhancing transparency in recruitment processes.

“The proposal is good for the people and what is good for the people, we are ready to consider. We will discuss with stakeholders the details of this matter,” he said, while highlighting the current absence of such an obligation on employers, reported New Straits Times.