KUALA LUMPUR: Poverty line income, median wages and labour productivity are among the five economic indicators used to determine the new minimum wage rate, says Human Resources Minister Datuk Seri R. Ramanan.
This follows the announcement of an increase in the minimum wage from RM1,700 to RM2,000 a month in Budget 2027.
“The other two indicators are the Consumer Price Index (CPI) and the unemployment rate.
“The minimum wage increase is expected to contribute towards achieving a median wage target of RM3,500 and raising the share of employees’ compensation in gross domestic product to 40% by 2030.
“We will continue to adopt an evidence-based policy approach in determining an effective minimum wage rate to raise the floor of workers’ incomes, as outlined in the 13th Malaysia Plan,” he said in a parliamentary reply on Monday (Oct 19).
He was responding to Datuk Mohd Isam Mohd Isa (BN-Tampin), who asked about the findings of the review of the minimum wage rate and the formula or indicators that would be used to determine the new rate, which is expected to take effect next year.
He said a comprehensive review of the Minimum Wages Order 2024 found that previous minimum wage increases had not triggered widespread employment transition risks or significant inflationary pressures.
However, survey findings showed that the costs of three basic necessities, namely food, housing and transport, had risen.
“To address this, the government is committed to strengthening the people’s purchasing power through a review of the minimum wage rate as a proactive measure to tackle current cost-of-living challenges.”
In Budget 2027, the government announced that the minimum wage would be raised to RM2,000 a month from June 2027.
The new rate will not apply to micro, small and medium enterprises with annual sales of less than RM50mil.
