Malaysia to raise monthly minimum wage to RM1,700 starting Feb 2025

KATHMANDU: In a significant move aimed at improving the livelihoods of workers, the Malaysian government has announced a nationwide increase in the monthly minimum wage to RM1,700 (approximately USD 365) effective from February 1, 2025. This adjustment is part of the government’s ongoing efforts to address the rising cost of living and ensure fair wages for all workers, particularly those in low-income sectors.

A Major Policy Shift for Workers’ Welfare
Malaysia’s Prime Minister Anwar Ibrahim made the announcement during a press conference, stating that this wage increase is crucial to combat the economic challenges that many Malaysians are facing. “This move is in line with our commitment to ensuring that every worker earns a decent living wage,” said Ibrahim. The previous minimum wage stood at RM1,500 (approximately USD 320), which had been set in May 2022.

With the cost of living continuing to rise due to inflationary pressures and global economic uncertainties, the government sees this wage revision as a necessary step to alleviate financial stress on workers. The new wage policy is expected to benefit more than 2.5 million workers, particularly in sectors like manufacturing, agriculture, and services, where minimum wage levels are crucial to maintaining worker stability.

Economic and Social Impact
The wage increase is anticipated to inject more disposable income into the economy, thereby boosting domestic consumption. Malaysia’s Finance Ministry predicts that the wage hike will positively impact not only workers but also the broader economy as consumer spending increases. This, in turn, could help support businesses, particularly small and medium enterprises (SMEs), by stimulating demand for goods and services.

At the same time, the move is expected to pose challenges for certain sectors, particularly labor-intensive industries, which may see increased operational costs. In response to these concerns, the government has promised a series of relief measures, including tax incentives and subsidies, to assist industries most affected by the wage hike.

Business Reactions and Concerns
While the new minimum wage policy has been welcomed by labor unions and worker advocacy groups, some business leaders have expressed reservations about its potential impact on profitability. Many industries, especially those relying on a large unskilled labor force, such as construction and agriculture, have voiced concerns that the wage increase may lead to higher production costs.

Speaking on behalf of employers, the Malaysian Employers Federation (MEF) expressed mixed feelings about the wage hike. “While we recognize the need to raise wages to cope with the rising cost of living, we urge the government to consider gradual implementation or provide additional support for businesses that may struggle to absorb the increased costs,” said MEF President Syed Hussain Syed Husman.

The Federation of Malaysian Manufacturers (FMM) also echoed these concerns, stating that many small businesses might face challenges in sustaining the higher labor costs, which could lead to potential layoffs or downsizing.

Support from Labor Unions
On the other hand, labor unions have largely celebrated the wage increase as a victory for workers. MTUC (Malaysian Trades Union Congress) President Mohamed Shafie BP Mammal hailed the decision, stating that the new wage floor would help uplift millions of workers who have struggled with stagnant wages and rising living costs. “This is a much-needed reform for workers in Malaysia, and we appreciate the government’s commitment to ensuring decent wages,” said Shafie.

The MTUC has also emphasized the need for strict enforcement of the new wage rules to prevent exploitation and ensure that all workers, including foreign laborers, benefit from the new policy.

International Labor Standards and Regional Context
With this wage increase, Malaysia aims to align itself more closely with international labor standards, improving the quality of life for its workforce. The wage hike also puts Malaysia ahead of some neighboring countries in Southeast Asia, many of which have been slow to raise their minimum wages.

Malaysia is a popular destination for workers from countries such as Nepal, Bangladesh, and Indonesia, with thousands of migrant workers employed in industries like manufacturing, construction, and agriculture. The wage hike is expected to attract more workers from these countries, though some labor experts suggest that better working conditions and stricter enforcement of labor laws are equally important to ensuring that foreign workers benefit from the wage increase.