Let’s dive deep as we look into minimum wage!

Getting into the job market isn’t easy. Furthermore, the cost of living in Malaysia especially in urban areas is also increasing. You are not sure how much employers are paying you and are worried about whether you can support yourself.

Good news! The government has raised the minimum wage in the latest Budget 2025.

Starting from February 2025, the minimum wage in Malaysia will increase to RM1,700 per month from RM1,500 per month. If you are curious about what this means, this is the article for you.

History and Purpose of Minimum Wage

A minimum wage is as per its name the minimum amount an employer needs to pay their employee.

The concept of minimum wage in Malaysia was first introduced in 2011 by the government. They established and gazetted the National Wages Consultative Council Act 2011, where the council’s roles were to:

  1. Ensure the basic needs of workers and their families are met
  2. Provide enough social protection for them
  3. Incentivise businesses to invest in more advanced technologies
  4. Reduce dependency on foreign labour

In 2013, the minimum wage was first set at RM900 for Peninsular Malaysia and RM800 for East Malaysia (Sabah & Sarawak). It was then increased subsequently to RM1,000 in 2016, and RM1,100 in 2019. The council decided to raise the minimum wage more aggressively during the pandemic to RM1,200 in 2020 and RM1,500 in 2022. This trend indicates that the council sets a new minimum wage level every 2 to 3 years.

Most recently in Budget 2025, it was announced that minimum wage in Malaysia will be raised to RM1,700 starting from February 2025.

Who Does it Apply To?

The minimum wage applies to almost all workers regardless of working arrangements and also foreigners. If you are in a full-time, part-time, contract, commission-based, or other working arrangements, you are entitled to RM1,700 per month or RM8.17 per hour at the minimum.

However, there are two exceptions to this. If you are on an internship or apprenticeship, you will not be eligible for the minimum wage. And you won’t be eligible also if you are a domestic worker.

However, rest assured. Both Indonesia and Philippines have negotiated for a minimum of RM1,500 and USD400 in salary for their domestic workers in Malaysia respectively before this. They will probably look to renegotiate this again considering the increase in Malaysian minimum wage.

Furthermore, companies with less than 5 employees are given 6 months to comply with the minimum wage. This is because small companies face steep increase in their salary cost as they don’t make as much as the big companies.

What are the Pros and Cons?

The minimum wage will have its pros and cons for Malaysians. Here are four of them.

Pro 1. Ensures Malaysians (and also foreigners) are compensated fairly and not exploited

A minimum wage provides a basic salary floor for every one regardless of race, status, income, nationality and other characteristics. At the very least, you will not be paid below that level and be able to support yourself and your family.

This is particularly important as absolute poverty rates have increased in recent years to as high as 8.4% in 2020. It is currently at 6.2% in 2022. A higher minimum wage should help with reducing poverty in Malaysia.

Pro 2. Minimum wage will normally come with EPF and SOCSO

With a higher minimum wage, the amount contributed to Employee Provident Fund (EPF) and SOCSO by both you and your employer will also increase.

EPF is important to support your retirement life when you come to old age. SOCSO will provide you with coverage against working accidents and disabilities.

Con 1. Salaries could be reduced

To pay for higher minimum wages, employers might resort to reducing the salaries of employees which are higher. While this is rare, there could be instances when the company is not doing well and have to make unpopular decisions without violating the minimum wage law.

Con 2. Might be hard to find a job

With a higher minimum wage, employers might be more selective when hiring. They face higher salary cost and might even choose to not hire if they can’t afford it.

Employed but Not Given Minimum Wage?

You can bring your case to the National Wages Consultative Council and the Ministry of Human Resources.

By law, your employer needs to pay you the minimum wage. If there is a valid case, government officials will conduct an investigation into it and request for the required documents from your employer.

In some cases, they could even get a warrant to enter your employer’s property to seize the required documents. If you are worried about your position in the company (whether by being the victim or an informer), the Act also have specific secrecy laws to protect your identity.

With sufficient evidence, a court case will be brought onto the employer. If convicted, the employer could face penalties of about RM10,000 for the first offence and might have to reimburse the outstanding difference between your current salary and the minimum wage.

Here is a full breakdown of the penalties

  • First Offense: Fine not exceeding RM10,000
  • Continued Offense: Daily fine of RM1,000
  • Repeated Offense: Fine of up to RM20,000 or prison for up to 5 years

Conclusion

Get to know the minimum wage in Malaysia and how it could affect you!

Firstly, it’s RM1,700 per month or RM8.17 per hour (estimated) that you should be getting at the minimum. It ensures that you have some basic income no matter the position to support your family, but be careful also, employers might cut your salary or be more selective in hiring.

If you find your employer refusing to pay the minimum wage, know that you can bring this case to the Ministry of Human Resources.

 

Let us know in the comments below on what you think about the minimum wage!

 

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