PUTRAJAYA: The government had not arrived at the new minimum wage figures arbitrarily, as the main intention was to find a middle ground that could benefit both employers and workers, says National Wages Consultative Council chairman Tan Sri Zainal Rahim Seman.
Speaking to the media Friday (Oct 16) after a media conference by Human Resources Minister Datuk Seri R. Ramanan on the new proposed minimum wage, Zainal said that Malaysia cannot afford to lag behind developed countries anymore.
“Implementation challenges are inevitable. When we first introduced the minimum wage of RM900, there were problems as well. Such challenges are to be expected, but it is our responsibility to address them through effective enforcement and implementation.
“We have not arrived at these figures arbitrarily. Instead, they are based on research conducted by academics and the relevant research team. The projections are intended to establish a reasonable and appropriate wage rate without placing an excessive burden on any party,” said Zainal.
The former secretary-general to the Human Resources Ministry who was involved in the introduction of a minimum wage, Zainal said that 21 engagement sessions were conducted nationwide prior to the minimum wage reform announced in Budget 2027.
“It is about ensuring that wages are commensurate with workers' contributions and needs. First, wages must provide workers with a reasonable standard of living, including adequate financial comfort and purchasing power.
“In considering these objectives, we also compared median wages as part of our policy review. We found that although wages have increased following previous reviews, the adjustments have not necessarily placed an excessive burden on employers, partly because minimum wages are reviewed every two years rather than annually.
“Taking economic needs into account, we then developed our projections. To ensure fairness for all parties, we consulted employers, workers, trade unions and academics.
“We have five highly experienced individuals, including university lecturers specialising in economics, who assist us in conducting the analysis,” said Zainal.
He said the upcoming order will be the seventh Minimum Wages Order.
“The previous reviews have taken place over approximately six years.
“The government has made a concession for businesses with annual turnover of RM50mil or less by exempting them from the mandatory implementation of the RM2,000 minimum wage. These businesses may continue paying the existing minimum wage of RM1,700.
“We hope employers will voluntarily implement the RM2,000 minimum wage if they have the financial capacity to do so, as a way of providing additional support and incentives to their workers.
“Wages must provide workers with a reasonable standard of living, including adequate financial comfort and purchasing power,” said Zainal.
He stated that this increase in minimum wage to RM2,000 is the needed step to support the government's objective of increasing employees' compensation to 40% of Malaysia's GDP by the end of the 13th Malaysia Plan.
“At present, we are achieving only approximately 32% to 33%. We can no longer afford to delay the necessary progress towards this target.
“Therefore, the decision was reached through a consultative process involving workers, employers and the government.
“If Malaysia is to become a developed, high-income nation, we cannot afford to fall behind.
“We also hope that graduates entering the private sector will receive fair and appropriate starting salaries.
“The public sector has already undergone changes in its salary structure. The private sector similarly needs government guidance on appropriate starting salary levels,” said Zainal.
On Oct 9, while tabling the Budget 2027, Prime Minister Datuk Seri Anwar Ibrahim said that the government has agreed to increase the minimum wage from RM1,700 currently to RM2,000, effective June 2027.
Anwar said micro, small and medium enterprises (SMEs) with annual sales below RM50mil would be exempted from the new rate to allow them time to adjust their business models.
He said the new minimum wage would cover more than four million workers.
Come June next year, the government would also introduce a minimum monthly wage of RM2,500 for semi-skilled workers and graduates as part of reforms to the workers’ income framework.
