Kuala Lumpur:The government has announced a plan to increase the minimum wage from RM1,700 to RM2,000, starting in June 2027. This decision is expected to benefit more than four million workers across the country.

According to BERNAMA News Agency, Prime Minister Datuk Seri Anwar Ibrahim stated that micro, small, and medium enterprises (MSMEs) with sales revenue below RM50 million will be exempt from implementing the new wage rate immediately, allowing them time to adjust their business models.

The Prime Minister emphasized that the wage increase aims to reduce the disparity between productivity and wages, as workers' incomes have not kept pace with rising commodity prices. Anwar, who also serves as Finance Minister, mentioned plans to reform the wage framework by setting a starting minimum wage of RM2,500 per month for semi-skilled positions and graduates.

Anwar highlighted that while the minimum wage increase raises the income floor for workers, skilled workers' wages remain disproportionate to their qualifications. He noted that the share of employee compensation in Malaysia's Gross Domestic Product (GDP) is currently low at 33.9 percent.

Additionally, the government has welcomed commitments from government-linked investment companies (GLICs) and government-linked companies (GLCs) to raise the living wage benchmark from RM3,100 to RM3,400 per month, benefiting 230,000 workers. The Prime Minister encouraged private sector employers to adopt fairer wage practices, as seen in sectors such as banking and oil and gas.

To address the issue of employing undocumented foreign workers, Anwar announced that companies, excluding MSMEs, will only be eligible for tax deductions on wage expenses if payments are made through bank accounts, in line with the Employment Act 1955. However, this requirement will not apply to tax deductions for other expenses.