Progressive Wage Policy Update: 4,000+ Employers and 51,000 Employees Involved

More Malaysian employers are now participating in the government’s Progressive Wage Policy (PWP), signalling a broader shift in how wages are structured and reviewed in the private sector. The policy is part of Malaysia’s ongoing effort to align wage growth with productivity and cost-of-living realities.

According to Economy Minister Akmal Nasrullah Mohd Nasir, a total of 4,025 employers, involving 51,363 employees, have successfully participated in the Progressive Wage Policy and met the required salary increase conditions as of 31 December 2025.

The update was shared during a recent sitting at the Dewan Rakyat, highlighting the government’s continued focus on wage reform and long-term labour market sustainability.

Image Source : Malay Mail

What Is the Progressive Wage Policy?

The Progressive Wage Policy is a government-led initiative designed to:

Encourage structured and gradual salary increases
Link wage growth to employee productivity
Support workers in managing the rising cost of living
Reform Malaysia’s labour market in a more sustainable way

Under the policy, employers who raise salaries in accordance with PWP wage guidelines may qualify for cash incentives provided by the government.

Why This Matters for Employers

For employers, the Progressive Wage Policy goes beyond basic compliance. It introduces both strategic opportunities and operational considerations.

Key points employers should be aware of:

Participation is voluntary, not mandatory
Salary adjustments must follow PWP wage guidelines
Employers who meet the criteria may receive financial incentives
The policy framework currently runs until 2027, with periodic reviews

As highlighted by the minister, meaningful wage growth requires active cooperation from the private sector, particularly in ensuring that salary increases are supported by productivity improvements.

This makes the policy especially relevant for employers reviewing pay structures, workforce planning, and long-term retention strategies.

Government Direction on Wages and Income Growth

The Progressive Wage Policy supports broader national wage targets under the 13th Malaysia Plan (13MP), which sets clear expectations for income growth in the coming years.

Under the plan:

Malaysia aims to reach a median monthly salary of RM3,500 by 2030
Median monthly wages increased from RM2,602 in 2023 to RM2,793 in 2024
This represents an annual growth rate of 7.3%

These figures indicate a clear policy direction: wage levels are expected to continue rising, and employers should factor this trend into future payroll and cost planning.

Minimum Wage Update Employers Must Be Aware Of

While the Progressive Wage Policy focuses on structured wage progression and incentives, employers must also continue to comply with statutory minimum wage requirements.

The Minimum Wage Order 2024 has been gazetted and took effect on 1 February 2025.

Key update:

Minimum wage increased from RM1,500 to RM1,700 per month

The government has also confirmed that minimum wage reviews will be conducted periodically, in line with economic conditions and national development objectives.

What Employers Can Do Now

To stay prepared and reduce future payroll risks, employers and HR teams may consider the following steps:

Review existing salary structures against PWP guidelines
Assess productivity benchmarks and performance frameworks
Factor potential future wage increases into workforce planning
Monitor government announcements related to wage and labour policies
Communicate clearly with employees about wage progression and expectations

Even for employers who do not intend to participate in PWP, understanding the policy helps anticipate future wage pressures and shifting labour market expectations.

FAQs

Is the Progressive Wage Policy mandatory for employers?

No. The Progressive Wage Policy is voluntary. Employers may choose whether to participate.

Who can join the Progressive Wage Policy?

Eligible employers may join as long as they meet the policy requirements and follow the wage guidelines set by the government.

Do employers receive incentives under the Progressive Wage Policy?

Yes. Employers who increase employee salaries according to PWP guidelines may qualify for cash incentives.

Does the Progressive Wage Policy replace the minimum wage?

No. The Progressive Wage Policy is separate from the minimum wage, and employers must still comply with the Minimum Wage Order.

Should employers join the Progressive Wage Policy?

This depends on the company’s financial position, workforce size, and long-term HR strategy. Some employers join to access incentives and improve retention, while others take a wait-and-see approach.

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