Budget 2027: Minimum Wage Raised To RM2,000 Effective June 2027

KUALA LUMPUR, Oct 9 – The government has agreed to increase Malaysia’s minimum wage rate from RM1,700 to RM2,000 per month effective June 2027, an initiative projected to directly benefit over four million workers across the nation.

Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced the wage adjustment during the tabling of Budget 2027 in the Dewan Rakyat on Friday afternoon, October 9, 2026.

To prevent sudden operational disruptions, micro, small, and medium enterprises (MSMEs) generating annual sales revenue below RM50 million are granted an exemption from immediately implementing the RM2,000 rate, providing them buffer time to restructure business models.

Anwar emphasized that raising the wage floor addresses real-wage stagnation and aligns compensation closer with recent productivity gains and cost-of-living adjustments.

Graduate Wage Guidelines, Living Wage Benchmark, and Tax Deductions

The government is introducing structural labor reforms to elevate employee compensation across various skill categories:

• Graduate and Semi-Skilled Starting Wage: The government will introduce a starting wage framework set at RM2,500 per month for semi-skilled positions and fresh graduates, addressing wage disparities relative to formal qualification levels.
• Employee Compensation GDP Share: Anwar noted that employee compensation in Malaysia currently accounts for 33.9 per cent of Gross Domestic Product (GDP), leaving significant room for upward distribution.
• GLIC and GLC Living Wage Increase: Government-linked investment companies (GLICs) and government-linked companies (GLCs) have committed to elevating their living wage benchmark from RM3,100 to RM3,400 per month, directly benefiting 230,000 workers.
• Private Sector Call: Private employers were encouraged to adopt living wage standards, mirroring practice models already established in the banking and oil and gas industries.
• Undocumented Worker Compliance: To deter the employment of undocumented foreign workers, non-MSME companies can only claim tax deductions for salary expenses if wage payments are processed through formal bank accounts in accordance with channels permitted under the Employment Act 1955.

The wage framework adjustments form part of the MADANI Government’s broader economic policy under Budget 2027 aimed at raising living standard floors across Malaysia.

–NMT