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Poverty line income, median wages, labour productivity, CPI, and unemployment figures will leveraged, says Human Resources Minister Ramanan Ramakrishnan.
Malaysia will use five economic indicators – including poverty line income, median wages, and labour productivity – to determine its new minimum wage rate, Dato’ Sri Ramanan Ramakrishnan, Minister of Human Resources has said, and according to The Star.
The other two indicators are the Consumer Price Index (CPI) and unemployment rate.
As reported by The Star, Minister Ramanan said the review follows the upcoming increase to the minimum wage, announced in Budget 2027.
The increase is expected to contribute towards the Government’s target of raising median wages to RM3,500 and increasing employees’ compensation as a share of gross domestic product (GDP) to 40% by 2030.
“We will continue to adopt an evidence-based policy approach in determining an effective minimum wage rate to raise the floor of workers’ incomes, as outlined in the 13th Malaysia Plan,” he said in a parliamentary reply on 19 October (Monday).
Minister Ramanan was responding to Dato’ Mohd Isam Mohd Isa (BN-Tampin), who had asked about the findings of the minimum wage review and the formula or indicators that would be used to determine the new rate, which is expected to take effect next year.
As further reported, he said a comprehensive review of the Minimum Wages Order 2024 found that previous minimum wage increases had not triggered widespread employment transition risks or significant inflationary pressures.
However, survey findings showed that the costs of three basic necessities, namely food, housing and transport, had risen.
Minister Ramanan said the Government was committed to strengthening purchasing power through a review of the minimum wage to address current cost-of-living challenges.
Under Budget 2027, the new RM2,000 monthly minimum wage will take effect from June 2027. Micro, small and medium enterprises (MSMEs) with annual sales of less than RM50mn will be exempt from the new rate.
Lead image / Dato' Ramanan Ramakrishnan's Facebook
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