Budget 2027: Minimum Wage to Increase to RM2,000 from June 2027

KUALA LUMPUR: The government has agreed to raise the minimum wage from RM1,700 to RM2,000 per month, effective June 2027, in a move expected to benefit more than four million workers nationwide.

Prime Minister Datuk Seri Anwar Ibrahim said the increase aims to narrow the gap between productivity and workers’ wages while addressing cost-of-living pressures, as household incomes have failed to keep pace with rising prices of goods.

“The new rate will take effect in June 2027. Micro, small and medium enterprises (MSMEs) with annual sales below RM50 million will be exempted to allow them time to adjust their business models. This means more than four million workers will be covered by the new minimum wage.

“The minimum wage only raises the income floor for workers, while wages for skilled workers remain disproportionate to their qualifications,” the Prime Minister said when tabling Budget 2027 in the Dewan Rakyat on Friday.

Meanwhile, Anwar said the government would introduce a new employee income framework, setting a starting minimum salary of RM2,500 per month for semi-skilled jobs and graduates.

He said the measure aims to address the issue of skilled workers receiving wages that do not reflect their qualifications, as the existing minimum wage merely establishes the lowest income threshold for employees.

In addition, Anwar, who is also Finance Minister, welcomed the commitment by government-linked investment companies (GLICs) and government-linked companies (GLCs) to raise the living wage benchmark to RM3,400 per month from RM3,100 previously.

The initiative is expected to benefit 230,000 workers.

Anwar also urged private-sector employers to follow the example set by the government, GLICs and GLCs in offering fairer wages to employees.

He said several employers in key sectors, including banking and oil and gas, had already established better salary rates.

“To curb the employment of undocumented foreign workers, the government has stipulated that companies other than MSMEs may only claim tax deductions for salary expenses if payments are made through bank accounts using channels permitted under the Employment Act 1955,” he said.

AWANI