PETALING JAYA: Malaysia’s median monthly wages grew at their fastest pace in years in 2025, outpacing the increase in average pay and pointing to broader income gains among workers.
However, economists cautioned that sustaining the momentum will depend on productivity and the creation of higher-value jobs.
The median monthly salary and wage rose 5.3% to RM2,940 in 2025 from RM2,793 a year earlier, compared with a 4.1% increase in average wages to RM3,803 from RM3,652, according to the Statistics Department.
The stronger growth in median wages is significant as it suggests that the improvement was not driven solely by higher-paid employees, but extended more broadly across the middle of the wage distribution.
Centre for Market Education chief executive officer Dr Carmelo Ferlito told StarBiz that the trend was encouraging, particularly given its implications for household purchasing power.
“The fact that the median wage grew faster than the average wage is certainly encouraging, because it suggests that wage improvements were not concentrated only among higher-income employees, but reached more broadly into the middle of the wage distribution,” he said.
However, he added that the headline figures needed to be considered alongside inflation.
Inflation averaged 1.4% in 2025 and stood at 1.9% year-on-year in August 2026, meaning a substantial portion of nominal wage growth translated into higher real purchasing power.
Ferlito said inflation pressures nevertheless warranted monitoring, particularly amid sustained money supply growth.
The bigger question, he said, was whether the current pace of wage growth could be sustained without putting pressure on businesses.
“Wage growth cannot permanently run ahead of productivity growth without eventually putting pressure on business margins, employment or prices,” he said.
Labour productivity per hour increased 3.7% in 2025 and accelerated to 5.5% year-on-year in the second quarter of 2026, providing a stronger backdrop for wage gains.
Ferlito said Malaysia should focus less on targeting wage growth directly and more on creating conditions that enable companies to invest, expand and compete for workers.
“Investment, technological upgrading, business expansion and capital accumulation raise the value of labour and therefore allow wages to rise sustainably,” he said.
The Statistics Department’s data showed that wage growth remained uneven across sectors.
Mining and quarrying recorded the highest average monthly wages at RM6,175, followed by services at RM3,993, manufacturing at RM3,357, construction at RM3,188 and agriculture at RM2,575.
Services remained the largest source of wage employment, accounting for 71.5% of recipients, with the number of wage earners rising 1.8% to 7.42 million.
The gap was also evident across skill categories. Skilled workers, who accounted for 36.6% of wage recipients, earned an average RM5,799 a month, compared with RM2,714 for semi-skilled workers and RM2,184 for low-skilled workers.
For Ferlito, the quality of job creation will be increasingly important as Malaysia seeks to lift incomes.
The Statistics Department estimates that 35.2% of tertiary-educated workers remained in skill-related underemployment in the second quarter of 2026, suggesting that a significant portion of Malaysia’s educated workforce is still not fully utilised in jobs matching their qualifications.
“These figures suggest that Malaysia is moving in the right direction, but the transformation toward a genuinely high-productivity labour market remains incomplete,” he said.
He said Malaysia should avoid relying primarily on government-led re-skilling programmes and instead create an environment where productive firms can emerge, invest and achieve greater scale.
Larger companies generally have greater capacity to invest in technology, research and development, training and more sophisticated production processes, supporting better-paying jobs.
“In that sense, the real wage agenda is fundamentally a productivity and investment agenda. If Malaysia succeeds in generating stronger firms competing for increasingly productive workers, higher wages become an outcome of economic development rather than an additional cost imposed upon it,” Ferlito said.
The Statistics Department said sustained efforts to enhance productivity, strengthen skills and create high-value jobs would be crucial to supporting sustainable real wage growth and workers’ well-being under the 13th Malaysia Plan.
