Govt reviewing RM1,700 minimum wage - minister

The minimum wage is under review, with the government considering whether to retain the RM1,700 monthly rate or raise it further.

Human Resources Minister R Ramanan said the review is being carried out under Section 25 of the National Wages Consultative Council Act 2011, with a final decision to be made after the National Wage and Gig Consultative Council completes the rate-setting process.

Ramanan said the review would consider both the poverty-line income and the median wage to gauge workers’ basic needs and employers’ ability to pay.

“So far, the ministry has not conducted a specific study on the living wage. However, Bank Negara introduced the concept of a living wage in 2018, estimating, for example, a living wage of RM2,700 for a single person in Kuala Lumpur.

“The Basic Expenditure of Decent Living, introduced by the Statistics Department, provides more granular rates according to location, demographics and actual household spending patterns.

“The 13th Malaysia Plan also outlines labour market reform strategies, including accelerating wage adjustments through minimum wage reviews by taking into account the living wage, which will be recommended to the government for the next minimum wage,” he was quoted as saying by Utusan Malaysia.

Higher poverty line income

The average poverty line income, which measures the minimum monthly income required by a household to meet basic needs, stood at RM2,705 in 2024, up from RM2,589 in 2022, according to the DOSM.

Other factors include the Consumer Price Index, labour productivity and the unemployment rate, Ramanan added.

The RM1,700 minimum wage represents a RM200 increase from the previous RM1,500 rate, which had been in place since May 2022.

Under the Minimum Wages Order 2024, the RM1,700 rate took effect on Feb 1, 2025 for employers with at least five workers, as well as employers engaged in professional activities regardless of workforce size.

It was extended to all other employers from Aug 1, 2025.

The National Wages Consultative Council Act requires the minimum wage to be reviewed at least once every two years, although a review does not automatically result in an increase.

Progressive wage policy

Ramanan also cited the implementation of the progressive wage policy to complement the minimum wage and productivity-based wage systems.

He said 5,910 employers had applied under the progressive wage system, of which 4,025, or 68.1 percent, had raised workers’ wages and submitted incentive claims.

The scheme has benefited 51,363 workers, exceeding the initial target of 50,000.

More than RM73 million in incentives has been disbursed, including about RM10.2 million for entry-level employees and RM62.9 million for non-entry-level workers.

“Registered companies that meet the conditions and criteria for progressive wage will receive incentives of up to RM200 a month for entry-level employees, namely those who have worked for up to 12 months, and up to RM300 a month for non-entry-level employees who have worked for more than 12 months.

“The government will determine the amount of incentives provided to companies based on the country’s fiscal position,” Ramanan said.

He added that workers under the scheme are encouraged to undergo at least 21 hours of recognised training to improve their skills and competency, with employers encouraged to raise wages in tandem with skills development, technology adoption and digital work practices.

He added that the ministry was also encouraging higher wages through the productivity-linked wage system and collective agreements involving trade unions.

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