From May 1st 2022, Malaysia has implemented a 25% increase in the minimum wage, taking it from RM1,200 to RM1,500.
The National Wage Consultative Council Act 2011 obligates the government to review the minimum wage every two years. The last time the minimum wage was reviewed and increased was on February 1, 2020.
Malaysia Minimum Wage
In Malaysia, minimum wage refers to lowest gross wage per month and it does not apply to apprentices and domestic servants. The minimum wage was was announced in October 2010 and introduced in January 2013 as one of the Government’s policy instruments vide New Economic Model (NEM). It was set at RM900, and had the intention of ensuring inclusiveness by transforming the economy from a middle-income to a high-income economy by the year 2020.
With the new minimum monthly wage of RM1,500, employers must pay workers at least RM7.21 an hour, or RM57.69 per day for a six-day work week and RM69.23 daily for a five-day week.
Businesses, particularly manufacturers and small and medium-sized enterprises (SMEs), have argued that the increase in Malaysia’s minimum wage is too soon and too steep, and could dampen economic recovery as many companies have yet to fully recover from the pandemic to absorb the costs.
Previous Minimum Wage in Malaysia
Prior to this update on May 1st, the minimum wage for employees in areas under city councils or municipal councils was RM1,200. For employees in areas that are not city councils or municipal councils, the wage was set at RM1,100.
Exceptions to Malaysias New Minimum Wage
If an employer has less than 5 employees, the new RM1,500 minimum wage rate will apply only from January 1st 2023. This deferred introduction of the new minimum wage rate also applies to employees who take in commission-based wages from such employers with less than five employees. Until the new minimum wage rate kicks in for these employers, the previous minimum wage will still apply.
If an employer carries out a professional activity classified under the Malaysia Standard Classification of Occupations (Masco) as published officially by the Human Resources Ministry, the new RM1,500 rate will apply from May 1, regardless of how many employees are employed by such an employer.
.png)