Minimum Wage Increase to Help Workers Cope with Living Costs, Pave Way for Better Incomes

PUTRAJAYA: The increase in the minimum wage to RM2,000 per month starting June 2027 is expected to help low-income workers cope with rising living costs, while the introduction of a starting basic salary of RM2,500 for graduates and semi-skilled workers will pave the way for a better income structure.

Universiti Putra Malaysia (UPM) Faculty of Human Ecology Dean Prof Dr Mohamad Fazli Sabri said the minimum wage increase and the introduction of the starting salary framework were important steps towards strengthening workers’ financial well-being, particularly among young people.

Mohamad Fazli, who is also a personal financial planning expert, said economic growth must translate into incomes that enable people to meet their basic needs, build savings and plan for the future.

“However, its effectiveness must be assessed based on actual improvements in workers’ lives, including their ability to reduce dependence on debt,” he told Bernama.

Mohamad Fazli said the RM300 increase in the minimum wage, or approximately 17.6 per cent, could help low-income workers cover expenses such as food, transportation and outstanding bills.

“Although the amount may seem small to some, it could provide much-needed financial breathing room for those who have long been forced to choose between equally important necessities,” he said.

He also suggested that the implementation of the policy be monitored to ensure that wage increases were not offset by reductions in allowances or deteriorating employment conditions.

“The government needs to clarify the scope and implementation mechanisms, while employers should establish transparent salary progression pathways. Educational institutions must also strengthen employability skills and practical financial education.

“To me, the measure of this policy’s success is when workers have money left after meeting their basic needs, can handle emergencies without borrowing and feel increasingly confident about their future,” he said.

Meanwhile, National Wages Consultative Council (MPGN) Chairman Tan Sri Zainal Rahim Seman described the introduction of the new minimum wage and starting salaries for graduates and semi-skilled workers as an important step towards improving employee welfare.

He said the private sector needed clearer wage guidelines to reduce disparities in wage rates between states and local authorities.

“We have seen public sector salaries move to a different level. Therefore, the private sector also needs guidelines from the government to establish reasonable wages.

“Otherwise, we will face wage disparities between states, as well as between one local authority and another,” he said.

For those preparing to enter the workforce, the implementation of the policy is expected to help ease financial pressures amid rising living costs.

Universiti Utara Malaysia final-year student Nurul Aisya Syaqila Mazlan, 22, said the minimum wage increase and the introduction of higher starting salaries were important to ensure workers, especially young people, earned enough to meet their basic needs.

“This increase is very important to me because the cost of living, including food, transportation and accommodation, continues to rise.

“For young people entering the workforce, higher salaries can help cover essential expenses, reduce financial pressure and improve their quality of life,” she said.

On Friday, Human Resources Minister Datuk Seri R Ramanan was reported as saying that reforms to the workers’ income framework under Budget 2027 reflected the government’s direction towards developing a skilled, high-income and adequately protected workforce, in line with the country’s aspiration to transition towards a high-value economy.

He said the Ministry of Human Resources (KESUMA) was preparing wage guidelines based on qualifications, skills and job categories, targeted for implementation beginning June 2027, before being further strengthened through legislative amendments in the future.

He said the Guidelines on Starting Basic Salaries Based on the Malaysia Standard Classification of Occupations (MASCO) would provide a more comprehensive reference for starting basic salary rates according to job categories and qualification levels.

In addition, KESUMA is refining its wage payment monitoring mechanism through the e-Wages module to facilitate monitoring and strengthen the enforcement of labour laws.

“Overall, KESUMA’s focus is not merely on setting a salary figure but on developing a clearer wage structure based on occupations, qualifications and skills.

“This forms part of the government’s efforts to address wage compression, enhance the value of jobs and support the country’s transition towards a high-value economy,” he said.

Prime Minister Datuk Seri Anwar Ibrahim, when tabling Budget 2027, announced that the government had agreed to raise the minimum wage from RM1,700 to RM2,000 per month beginning June 2027, a move expected to benefit more than four million workers.

He said micro, small and medium enterprises (MSMEs) with annual sales revenue below RM50 million would be exempted from implementing the new rate to allow them time to adjust their respective business models.

Anwar also announced the introduction of a starting basic salary of RM2,500 per month for semi-skilled jobs and graduates as an initial step towards reforming the workers’ income framework.

BERNAMA