A leap jump in minimum wage revision should be considered in expediting the achievement of the 45% labour income share by 2033, as aspired in the Ekonomi Madani framework.
THERE are significant areas of improvement to enhance the overall effectiveness of minimum wage implementation in Malaysia to ensure better wages for the nation’s workforce.
The Economic Outlook 2026 report stated that policy recommendations may focus on strengthening monitoring and enforcement mechanisms to ensure full compliance across sectors.
This includes enhancing the governance framework, leveraging digital-based reporting and declaration mechanism, and strengthening transparency in wage practices.
In ensuring a sustained income growth, the feasibility of instituting a compulsory structured annual wage increment aligning with inflation and productivity trends may also be explored.
In addition, a leap jump in minimum wage revision should be considered in expediting the achievement of the 45% labour income share by 2033, as aspired in the Ekonomi Madani framework.
Companies, particularly from developed states, are also encouraged to offer a minimum wage higher than the national rate, considering the differences in cost of living.
These strategies would build a more equitable, productive, and resilient labour market that ensures fair remuneration for all workers.
Notably, the minimum wage policy has made notable progress in achieving some of its core objectives, such as increasing the purchasing power, strengthening safety net for low-wage workers and maintaining business competitiveness.
However, the policy has had minimal impact in increasing automation adoption and reducing dependency on low-skilled foreign labour, as minimum wage revisions alone have not made local employment sufficiently attractive, especially in labour-oriented industries.
This underscores the need for a more comprehensive approach, combining wage policy with broader labour market reforms, to fully realise the aspirations of Ekonomi Madani framework and build a more resilient workforce in the future.
Malaysia’s minimum wage policy was introduced to address the low wage structure in the labour market and promote a more equitable and resilient economy.
It was designed with the aim to raise wages of low-paid workers for a better safety net and well-being; encourage businesses to adopt automation for productivity improvement; and reduce the nation’s dependency on low-skilled foreign labour while ensuring local employment is more competitive.
After a decade of implementation, it is important to assess the outcome of the policy in improving the well-being of businesses and workers.
Malaysia’s journey towards implementing minimum wage has been a lengthy pursuit with the aim to ensure workers earn enough to cope with the cost of living.
It began in 1947 with the formation of the Wages Council, which was responsible for advising on fair wage practices for certain occupations.
Over the years, as the economy grew and living expenses increased, the need for a more structured wage system became clear.
This led to the official gazettement of the Minimum Wage Order in 2012, a major step in guaranteeing basic income for the low-wage earners across the country.
Since then, the minimum wage has been revised five times, gradually rising to the current rate of RM1,700 per month.
These changes reflect the ongoing efforts to ensure workers, especially those in low-paying jobs, can afford the essentials and live decently.
Every adjustment made to the minimum wage, aims to strike a balance, between workers welfare and businesses competitiveness.
Interestingly, a common perception of workers receiving salary below minimum wage are foreign workers; women; youth; those concentrated in construction and agriculture sectors; as well as those located in less developed states.
However, contrary to the perception, evidence demonstrates that the majority of the wage recipients are local workers, mostly male, and largely within the 25 to 34 age group.
Moreover, these workers are concentrated in the services and manufacturing sectors, with a significant share of around one-third, located in developed states such as Selangor and Johor.
