Malaysia To Raise Minimum Wage To RM2,000 From June 2027, Over 4 Million Workers To Benefit

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Malaysia will raise its minimum wage from RM1,700 to RM2,000 a month from June 2027, a move expected to benefit more than four million workers

Prime Minister cum Finance Minister Datuk Seri Anwar Ibrahim announced the increase while tabling Budget 2027 today, 9 October, citing the need to bridge the gap between worker productivity and wages as the cost of living continues to rise.

Micro, small, and medium enterprises (MSMEs) with annual sales revenue below RM50 million will be exempted from the new minimum wage requirement to give them more room to manage their business operations.

Anwar said compensation of employees accounted for just 33.9% of Malaysia's gross domestic product (GDP), highlighting the gap between economic output and the share going towards workers' incomes.

Graduates and semi-skilled workers to get RM2,500 minimum wage baseline

Beyond raising the minimum wage, the government will introduce a new income framework that establishes a minimum wage baseline of RM2,500 a month for semi-skilled workers and graduates.

Anwar said the existing minimum wage only raises the income floor for workers, while skilled employees continue to face wages that do not adequately reflect their qualifications.

The proposed reform aims to address that gap by setting a higher starting baseline for these categories of workers.

GLICs and GLCs to raise the living wage benchmark to RM3,400

Government-linked investment companies (GLICs) and government-linked companies (GLCs) will also increase their living wage benchmark from RM3,100 to RM3,400 a month.

According to Anwar, the adjustment is expected to benefit approximately 230,000 workers.

He also pointed to salary increases in the civil service and more competitive pay offered by some major employers in the banking and oil and gas sectors as examples of efforts to improve workers' incomes.

Anwar called on private-sector employers to follow suit and review their own salary structures.

Companies must pay wages through bank accounts to claim tax deductions

In a separate measure concerning employee salaries, the government will tighten the conditions under which companies can claim tax deductions for wage expenses.

Under the proposed measure, companies other than MSMEs will only be allowed to claim tax deductions for wage expenses if the wages are paid through bank accounts using channels permitted under the Employment Act 1955.

The measure is intended to close loopholes involving employers who hire undocumented foreign workers.

Anwar said the new condition would apply specifically to wage expenses, while tax deductions for other business expenses would not be subject to the same requirement.

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