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As at 31 December 2025, more than 4,000 employers have implemented salary increases under the policy.
Malaysia is attempting to rebalance wage growth through its Progressive Salary Policy (Dasar Gaji Progresif or DGP), introduced under the mid-term review of the 12th Malaysia Plan.
In a verbal response in Parliament on 23 February 2026, Khairul Firdaus Akbar Khan, Deputy Human Resources Minister reiterated that the policy is designed to correct structural wage issues, promote fairer salary progression, and support long-term economic sustainability.
A voluntary approach to wage reform
The government positioned the DGP as a complementary measure to existing frameworks such as the minimum wage, productivity-linked wage systems (PLWS), and collective agreements.
DGP’s participation is voluntary. Employers opt in based on business needs and perceived benefits for workforce and employees.
Who the policy targets
The scheme targets local private-sector employers rather than government-linked companies or multinational corporations. These employers must contribute to both the Employees Provident Fund (EPF) and the Social Security Organisation (SOCSO).
As for employees, they must be:
- Malaysian citizens
- Full-time workers
- Earning above the minimum wage but not exceeding RM4,999 in basic monthly salary
Uptake across sectors
As at 31 December 2025, the ministry reported the following:
- 5,910 employers have applied to join the scheme
- 4,025 employers have implemented salary increases
- 51,363 employees have benefited
The largest share of participating companies comes from:
- Wholesale and retail trade (26.7%)
- Manufacturing (15.7%)
- Professional, scientific and technical services (11.1%)
- Education (7.4%)
- Accommodation and food and beverage (6.9%)
Cross-sector involvement suggests the policy can be implemented across a wide range of industries.
Measurable salary increases
Under the DGP, entry-level workers with less than 12 months of service saw salaries increase from RM1,900 to RM2,200, a rise of RM300 or about 16%.
At the same time, employees beyond the startup stage recorded an increase from RM2,199.15 to RM2,438, equivalent to RM238.85 or roughly 11%.
Salary increases under the DGP are tied to productivity improvements, with participating employees required to complete at least 21 hours of training annually.
Lead image / KESUMA Facebook
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