Malaysia Minimum Wage 2026: Proposed Hike, MSME Exemption & Budget 2027 Update

Malaysia’s minimum wage remains under review as the government considers a possible increase from the current RM1,700 per month, while micro, small and medium enterprises (MSMEs) have been granted a temporary exemption from any new minimum wage increase, according to Entrepreneur Development and Cooperatives Minister Steven Sim.

However, the government has not yet announced the final new minimum wage rate or its implementation details.

The issue is expected to remain in focus ahead of Budget 2027, which will be tabled on 9 October 2026. The date has been confirmed by the Ministry of Finance Malaysia.

Malaysia’s Current Minimum Wage Remains RM1,700

Malaysia’s current minimum wage is RM1,700 per month.

Under the Minimum Wages Order 2024, the RM1,700 rate initially took effect on 1 February 2025 for employers with five or more employees and employers carrying out professional activities regardless of the number of employees.

From 1 August 2025, the RM1,700 minimum wage was extended to employers with fewer than five employees, bringing the rate into full implementation nationwide for covered employees. The Sarawak Labour Department has also confirmed the full implementation of the RM1,700 rate from 1 August 2025.

The review is being carried out under Section 25 of the National Wages Consultative Council Act 2011, which requires the minimum wage order to be reviewed at least once every two years.

Has Malaysia Decided on a New Minimum Wage?

No.

This remains the most important point for employers and HR teams.

Human Resources Minister Datuk Seri R. Ramanan said on 29 September 2026 that the government had not yet decided on a new minimum wage rate.

He also rejected claims that the new rate had already been set at RM2,000, RM2,100 or RM2,200, saying any announcement would only be made after Cabinet approval, including approval from Prime Minister Datuk Seri Anwar Ibrahim.

Government spokesman and Communications Minister Fahmi Fadzil subsequently said the government was still studying the proposed adjustment, including the implementation timeframe and which groups or sectors would be affected.

Therefore, RM2,000, RM2,100 and RM2,200 should not be treated as Malaysia’s confirmed new minimum wage rates.

MSMEs Temporarily Exempted from a New Minimum Wage Increase

A major development came on 30 September 2026, when Steven Sim said the Cabinet had agreed that MSMEs would be exempted from the new minimum wage increase for the time being.

The decision was made after considering the operating cost pressures and economic challenges faced by smaller businesses.

According to Sim, the government will consider other measures to help raise wages for MSME workers, including wage subsidy support under the Progressive Wage Policy, so that wage increases can move together with productivity growth.

The distinction is important.

The MSME exemption concerns a new minimum wage increase. It does not remove the existing RM1,700 minimum wage requirement.

In other words, employers should not interpret the announcement as permission for MSMEs to pay below the current statutory minimum wage.

Until a new minimum wage order or implementation rule takes effect, the existing RM1,700 rate remains the applicable minimum wage for covered employees.

Why Are MSMEs Being Given Special Consideration?

The government has said it wants to balance higher wages for workers with the ability of local businesses to remain competitive and continue creating jobs.

Steven Sim said MSMEs are facing operating cost pressures and current economic challenges, which were among the considerations behind the Cabinet’s decision.

Business groups have welcomed the temporary exemption.

Samenta president Datuk William Ng said the decision could help protect the sustainability of approximately 1.3 million MSMEs facing higher operating costs, narrower profit margins and global economic uncertainty.

The Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM) also welcomed the exemption, saying it could provide financial relief to MSMEs while urging future wage increases to take into account productivity and business capacity.

Employers Remain Concerned About Higher Labour Costs

The possible increase has also raised concerns among employers about its wider impact on business costs.

A higher minimum wage could affect not only employees currently earning RM1,700, but also workers already earning above the statutory minimum. Employers may need to review their wider salary structures to maintain reasonable differences between roles and levels of experience.

A 2 October 2026 survey by SME Association of Malaysia and the Malaysia Retail Chain Association, involving 333 businesses, found that 61.6% of respondents said their current business conditions were worse or significantly worse than 12 months earlier.

The survey also found that only 6.6% of businesses supported increasing the minimum wage from RM1,700 to around RM2,000 at that point, while 92.8% expected pressure to adjust the salaries of existing employees earning above the new minimum threshold.

What Other Minimum Wage Figures Have Been Proposed?

Several figures have been discussed publicly, but none should be treated as the confirmed new statutory minimum wage.

On 29 September, Ramanan specifically said the government had not approved the reported RM2,000, RM2,100 or RM2,200 figures.

Separately, ACCCIM proposed RM1,900 per month as an appropriate minimum wage, arguing that a substantial increase could place additional pressure on smaller businesses.

These different figures show that there are competing views among stakeholders.

The final rate remains a government decision and should not be inferred from proposals made by employer or worker groups.

What Does the 13th Malaysia Plan Say About Wages?

Malaysia’s broader wage strategy extends beyond the statutory minimum wage.

Under the 13th Malaysia Plan (RMK13) 2026-2030, the government has set a target for Malaysia’s median monthly salary and wages to reach RM3,500 by 2030. The official RMK13 document lists the target alongside broader labour-market reforms.

Importantly, RM3,500 is a median wage target, not a RM3,500 statutory minimum wage.

This distinction matters because the median wage represents the midpoint of the wage distribution, while the minimum wage is the legal wage floor.

How Could a New Minimum Wage Affect Employers?

If a new minimum wage is introduced, employers may need to review more than employees currently earning below the new threshold.

Companies may need to assess:

Salary structures: Whether employees with more experience should receive a meaningful difference above the minimum wage.
Hiring budgets: Whether advertised salaries remain competitive while staying within approved budgets.
Payroll costs: The impact of higher basic wages on statutory employer contributions and total employment costs.
Business costs: Whether additional labour costs can be absorbed without affecting business sustainability.

What Should Employers Do Now?

For now, employers should continue using RM1,700 as the current statutory minimum wage for covered employees.

HR teams should also avoid making payroll changes based solely on unconfirmed figures such as RM2,000, RM2,100 or RM2,200.

Businesses preparing their 2027 budgets can model different salary scenarios, but actual payroll changes should only be made after the government confirms the new rate, effective date and groups or sectors covered.

For MSMEs, additional attention should be paid to the details of the temporary exemption once the government provides further implementation guidance.

What Happens Next?

The next major date is 9 October 2026, when Budget 2027 is scheduled to be tabled in Parliament. The Ministry of Finance confirmed the date in its Pre-Budget Statement 2027.

The government may provide further details on the minimum wage review, including the final rate, implementation timeline and treatment of MSMEs.

However, employers should wait for the government’s official announcement rather than relying on figures circulating before Budget 2027.

Until then, Malaysia’s minimum wage remains RM1,700 per month for covered employees.

For employers and HR professionals, the key questions are now how much the minimum wage may increase, when a new rate will take effect and how MSMEs will be treated under the new policy.

FAQs

What is Malaysia’s current minimum wage in 2026?

Malaysia’s current minimum wage is RM1,700 per month. The rate has been fully implemented nationwide for covered employees since 1 August 2025.

Has Malaysia approved a new minimum wage rate?

No. As of 5 October 2026, the government has not officially confirmed the new rate.

Are MSMEs Exempt from the current RM1,700 minimum wage?

No. The temporary exemption concerns a new minimum wage increase, not the current RM1,700 requirement.

Is RM2,000 the new minimum wage?

No. RM2,000, RM2,100 and RM2,200 have been reported as possible figures, but the government has not confirmed any of them as the new statutory rate.

When could Malaysia announce the new minimum wage?

The government has indicated that the issue could be addressed when Budget 2027 is tabled on 9 October 2026, although the final decision and implementation details remain subject to the government’s review.

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