Government Reviews Malaysia’s RM1,700 Minimum Wage As Living Costs Rise

Malaysia is reviewing its current RM1,700 monthly minimum wage, with the government assessing whether the rate should remain the same or be increased.

Human Resources Minister Datuk Seri R. Ramanan said the review will consider workers’ basic needs, cost of living, and employers’ ability to pay.

For employers, the important point is that RM1,700 remains the current minimum wage. No new rate has been announced yet.

Why Is Malaysia Reviewing The Minimum Wage?

The government will consider several economic and labour market indicators when reviewing the rate:

Poverty Line Income (PGI): To assess workers’ basic income needs.
Median Wage: To compare the minimum wage with overall wage levels.
Consumer Price Index (CPI): To account for changes in prices and inflation.
Labour Productivity: To consider the link between wages and productivity.
Unemployment Rate: To assess the condition of Malaysia’s labour market.
Employers’ Ability To Pay: To consider the financial impact of higher wages on businesses.

The review is intended to balance workers’ income needs with the ability of employers to manage higher labour costs.

Will The RM1,700 Minimum Wage Increase?

A possible increase is being considered, but the government has not confirmed a new minimum wage rate.

The review is being carried out under the National Wages Consultative Council Act 2011, with the final decision to follow the assessment process by the National Wages and Gig Economy Consultative Council (MPGGN).

Until a new rate is officially announced and takes effect, employers must continue to follow the current RM1,700 minimum wage.

The current rate came into full effect on 1 August 2025. Employers can refer to the official minimum wage information from the Ministry of Human Resources for the latest requirements.

Living Wage Also Part Of The Discussion

The minimum wage review also brings attention to the wider issue of a living wage.

Ramanan said the ministry has not conducted a specific new living wage study. However, Bank Negara Malaysia previously estimated that a single person in Kuala Lumpur would need around RM2,700 a month based on its 2018 living wage concept.

This RM2,700 figure should not be treated as a new 2026 minimum wage or official target.

The government is also considering the Department of Statistics Malaysia’s Basic Expenditure of Decent Living (PAKW), which provides more detailed estimates based on factors such as location, household characteristics and spending patterns.

The 13th Malaysia Plan also includes labour market reforms aimed at supporting wage growth and reviewing minimum wages with living wage considerations.

What Employers Need To Know

For employers, the current position is straightforward:

RM1,700 remains the current minimum wage.
There is no confirmed new minimum wage rate yet.
Employers should continue complying with the existing minimum wage requirements.
Employers should monitor announcements from KESUMA on the outcome of the review.
Businesses may want to review their payroll costs and salary structures in case a new rate is introduced.

The minimum wage generally refers to the employee’s basic salary, rather than allowances, incentives or other additional payments.

Progressive Wage Policy Is Also Supporting Higher Pay

Alongside the minimum wage review, the government is continuing the Progressive Wage Policy (DGP) to encourage higher wages based on workers’ skills and productivity.

According to the latest figures provided by the Human Resources Ministry:

5,910 employers had applied to participate.
4,025 employers, or 68.1%, had raised workers’ wages and submitted claims for incentives.
51,363 workers had benefited from the programme.
The number of workers benefiting exceeded the initial target of 50,000.
The government had disbursed more than RM73 million in Progressive Wage incentives.

Eligible employers may receive incentives of up to RM200 per month for entry-level workers and RM300 per month for non-entry-level workers, subject to the programme’s requirements.

The policy also links wage increases with recognised upskilling and training, with participating workers required to complete at least 21 hours of training.

What This Means For Employers

The minimum wage review does not mean employers need to increase wages immediately beyond the current RM1,700 requirement.

For now, employers should:

Maintain compliance with the RM1,700 minimum wage.
Monitor the government’s decision on the new wage rate.
Review salary structures for employees earning close to the minimum wage.
Assess the possible impact on hiring budgets and payroll costs.
Consider skills and productivity when planning future salary adjustments.

A future increase could have a greater impact on businesses that employ a large number of workers at or near the current minimum wage.

FAQs

Is Malaysia increasing the minimum wage?

Not yet. The government is reviewing the current RM1,700 minimum wage, but no new rate has been announced.

What is Malaysia’s current minimum wage?

The current minimum wage is RM1,700 per month. The rate took full effect on 1 August 2025.

Why is the RM1,700 minimum wage being reviewed?

The review considers factors such as cost of living, median wages, inflation, productivity, unemployment and employers’ ability to pay.

Will employers have to pay more?

Not yet. Employers should continue following the current RM1,700 minimum wage until a new rate is officially announced and implemented.

What is the progressive wage policy?

The Progressive Wage Policy encourages employers to increase wages based on workers’ skills, training and productivity, rather than relying only on the minimum wage.

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