Malaysia's RM2,000 Wage Floor Arrives June 2027, With RM2,500 Proposed for Graduates and Semi-Skilled Workers

Malaysia's minimum wage rises from RM1,700 to RM2,000 a month, effective June 2027, in a move that will benefit more than four million workers, but micro, small and medium enterprises with annual sales below RM50 million will be exempted. On top of the new floor, Budget 2027 sets out a starting minimum wage of RM2,500 a month for semi-skilled positions and graduates, which is still a proposed part of a wider wage reform. For Metaintro readers working in Malaysia, or about to graduate there, the useful detail sits underneath the headline numbers, covering which employers must pay the new rate, what the current wage order sets for hourly and piece-rate pay, what gig drivers get, and how the labour market looks going in.

What Did Budget 2027 Change for Malaysia's Minimum Wage?

The change was set out by Prime Minister Anwar Ibrahim, who is also Finance Minister, while tabling the 2027 Budget in the Dewan Rakyat. The minimum wage rate will be raised from RM1,700 to RM2,000 effective June next year, and the new floor will benefit more than four million workers. Taiwan is also raising its minimum wage for 2027.

Anwar said the aim is narrowing the gap between productivity and wages, particularly as workers' incomes had not kept pace with rising commodity prices, and that the share of employee compensation in Malaysia's GDP remains low at 33.9%.

The current rate is recent. The RM1,700 increase was announced by the Prime Minister during the tabling of the 2025 Malaysian Budget, and the Minimum Wages Order 2024 was gazetted on 4 December 2024. The RM1,700 minimum wage applies to all workers in Malaysia except domestic workers.

Before the budget, human resources minister R Ramanan said in August the government was reviewing the RM1,700 minimum wage, with a final decision on maintaining or raising the amount to be made by the National Wages Consultative Council, and that the review would consider basic economic indicators such as the poverty line and median wage, as well as inflation, labour productivity and the unemployment rate.

Which Employers Are Exempt From the RM2,000 Rate?

Not every employer has to pay it. Micro, small, and medium enterprises (MSMEs) with sales revenue below RM50 million are exempted from implementing the new rate to allow them time to adjust their business models. How long the exemption lasts is not given in Bernama's budget report, so no end date can be assumed.

On 30 September, the Cabinet agreed to exempt micro, small and medium-sized enterprises (MSMEs) from further increases in minimum wage for the time being, with entrepreneur development and cooperatives minister Steven Sim pointing to other approaches to increase the wages of workers in the MSME sector, including wage subsidies under the Progressive Wage Policy.

One employer group wants the line drawn clearly. The Malaysian Employers' Federation asked the government to clarify how the annual sales threshold of RM50 million will be assessed, including the relevant financial year, treatment of related companies, and the application of the exemption to different business structures. The Malaysian Industrial Commercial Service Employers Association, known as Micsea, welcomed the exemption but proposed a temporary wage-related tax rebate or wage offset in the first year of implementation for firms in the RM50 million to RM100 million range.

The objective is not to delay compliance. The objective is to prevent the transition from becoming a penalty for businesses that have successfully grown beyond the MSME threshold, the Malaysian Industrial Commercial Service Employers Association said in a statement following the tabling of the budget.

A second measure targets how wages are paid. Companies other than MSMEs would only be eligible to claim tax deductions for wage expenses if payments were made through bank accounts, in accordance with the channels permitted under the Employment Act 1955. Anwar said the measure aimed to close loopholes that allowed employers to hire undocumented foreign workers, and the requirement would apply only to salary expenses, not to other deductions.

What Does the Current Wage Order Say About Hourly and Piece-Rate Pay?

The RM1,700 rate is set by the Minimum Wages Order 2024, made by the Minister of Human Resource under section 23 of the National Wages Consultative Council Act 2011. It sets RM1,700 a month, RM8.72 an hour, and daily rates of RM65.38, RM78.46 and RM98.08 for six, five and four working days a week.

The order also protects workers who have no basic wage. For an employee paid wages based only on piece rate, tonnage, task, trip or commission, the monthly wage payable shall not be less than RM1,700.00.

The order was phased in. On 1 February 2025, RM1,700 was set to apply to employers with five or more employees and to employers carrying out professional activities under the Malaysia Standard Classification of Occupations regardless of the number of employees they have, and from 1 August 2025, RM1,700 was set to apply to all employers regardless of number of employees. Until then, employers with fewer than five employees, other than those carrying out professional activities under that classification, could pay RM1,500.

One group is left out. The order shall not apply to a domestic servant as defined under the Employment Act 1955 and the Sabah and Sarawak labour ordinances. The Government has also stressed that the minimum wages apply to foreign workers, Skrine noted in its December 2024 alert. New hourly and daily figures for RM2,000 were not given in Bernama's budget report.

What Is the Proposed RM2,500 Starting Wage for Graduates?

This is the newer idea. Budget 2027 proposes a starting minimum wage of RM2,500 a month for semi-skilled workers and graduates as part of efforts to reform the country's wage framework. Anwar's reasoning is that the minimum wage only raises the income floor for workers, while skilled workers are still not paid wages commensurate with their qualifications.

Therefore, the government will reform the wage framework by introducing a minimum salary of RM2,500 per month for semi-skilled workers and graduates as a starting point, Prime Minister Anwar Ibrahim said while tabling the 2027 budget.

Keep the hedge in mind. The RM2,500 starting wage is still proposed. A start date, a legal vehicle and a definition of semi-skilled work are not given in Bernama's budget report.

One employer group wants it narrowed. Micsea said the RM2,500 level should not be a blanket requirement across all positions, but linked to relevant certifications and qualifications, and recommended linking the framework to Malaysian Standard Classification of Occupations classifications, technical and vocational education and training qualifications, Malaysian Skills Certificate Levels 4 and 5 competencies, job complexity, professional certification, and demonstrable productivity. It also warned that a sharp rise in entry-level pay could cause wage compression as pay gaps between junior staff, supervisors and middle managers in MSMEs are often narrow.

The same threshold shows up in student loans. Malaysians earning RM2,500 or less a month will not have to repay their National Higher Education Fund Corporation (PTPTN) loans in 2027, and borrowers earning between RM2,500 and RM3,000 monthly would only be required to make minimum repayments of RM50 a month, with more than 400,000 borrowers expected to benefit from the measures.

How Does the Living Wage at Government-Linked Companies Compare?

A higher benchmark is planned at state-linked employers. Government-linked investment companies (GLICs) and government-linked companies (GLCs) have committed to raise the living wage benchmark from RM3,100 to RM3,400 a month, benefiting 230,000 workers.

Private employers were asked to follow. Anwar said several major employers in the banking and oil and gas sectors had introduced more reasonable wages, and urged all private-sector employers to follow suit. It is an appeal, and no deadline was attached to it in theSun's report on the RM2,500 starting wage.

For a job seeker, that gives three reference points in one budget, the RM2,000 minimum wage from June 2027, the proposed RM2,500 starting wage for semi-skilled workers and graduates and the RM3,400 living wage benchmark that GLICs and GLCs have committed to.

What Do E-Hailing Drivers and Delivery Riders Get?

Gig workers get a separate package. The government and Grab have agreed to co-fund a RM160 million support package, taking effect next year. The package covers higher minimum earnings rates, aid for vehicle maintenance and insurance costs, and PERKESO contributions. South Korea is also designing a pay floor for couriers, riders and gig workers.

The income effect is projected, not guaranteed. Median net income for e-hailing drivers is projected to rise by up to RM227 a month, while p-hailing riders stand to gain up to RM100 more a month.

Social security support is wider. The government is also offering a 35% PERKESO matching contribution to e-hailing and p-hailing workers, which will rise to 50% if platform companies also shoulder the workers' contributions, and a 70% matching contribution to over 200,000 self-employed individuals in 17 non-mandatory sectors.

One drivers' association focused on insurance. Persatuan Rakan Grab Malaysia said rising insurance costs were among the first issues the association raised in talks with Grab Malaysia since the association was formed last month.

What Does the August Jobs Data Say About the Labour Market?

DOSM released the August labour figures on Oct 9. Malaysia's unemployment rate declined to 2.9% in August 2026 from 3.0% in July, with the number of unemployed persons falling by 8,700 to 511,600.

It is not a new low. The same 2.9% rate was recorded in November 2025, December 2025, January 2026, February 2026 and March 2026, before the rate sat at 3.0% from April 2026 to July 2026, in the monthly labour force data published by the Department of Statistics Malaysia.

The unemployment rate among youths aged 15 to 24 fell by 0.1 percentage points to 10.1%, against 2.9% overall, and the unemployment rate among youths aged 15 to 30 declined by 0.1 percentage points to 6.3%. Among the actively unemployed, 64.2% had been unemployed for less than three months.

Most employed people are employees. The employee category, which accounted for 74.9% of total employed persons, recorded a marginal increase of 0.1% to 12.63 million, and the number of own-account workers increased by 0.2% to 3.17 million. The next update to the monthly labour force data is scheduled for 11 Nov 2026.

What Else in Budget 2027 Touches Young Workers' Pay and Skills?

Budget 2027 also funds training. Malaysians will have access to three million skills training opportunities under a RM3 billion initiative by the Human Resource Development Corporation (HRD Corp), and the Skills Development Fund Corporation (PTPK) would provide RM500 million to finance trainees at registered public and private skills training institutions.

Some programmes are targeted. The Construction Industry Development Board (CIDB) would train 10,000 youths in robotics and digital technologies, and MARA will train and place 1,000 Bumiputera youths in high-growth sectors.

Employers also get a reason to help with student debt. The government will also offer tax deductions to employers who repay PTPTN loans on behalf of their employees, covering repayments made between Jan 1, 2027 and Dec 31, 2028.

What This Means for Malaysian Workers and Graduates, and What Should You Do Next?

The budget sets a new floor for some workers and a proposed starting wage for others. The RM2,000 rate starts in June 2027 for employers that are not exempt, while the RM2,500 starting wage is still a proposal. These steps follow from that.

• Find out whether your employer is exempt. The exemption covers MSMEs with sales revenue below RM50 million, and the Malaysian Employers' Federation wants clarity on how the annual sales threshold of RM50 million will be assessed, so ask HR how your company is classified.
• Check your pay against the current order. The current order sets RM1,700 a month or RM8.72 an hour, and a monthly floor of RM1,700 for workers paid only by piece rate, tonnage, task, trip or commission, and MSMEs with sales revenue below RM50 million are exempted from implementing the new rate after the June 2027 rise.
• Use RM2,500 as a reference, not a promise. Graduates can compare offers with the proposed RM2,500 starting wage, while remembering it is still proposed.
• Gig workers, watch the package. The RM160 million support package takes effect next year, and the government is offering a 35% PERKESO matching contribution, rising to 50% if platforms also contribute.
• Use the training money. The RM3 billion HRD Corp initiative will give Malaysians access to three million skills training opportunities, and unemployment among youths aged 15 to 24 was 10.1% in August.

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People Also Asked

Q: When does Malaysia's RM2,000 minimum wage start?

A: The rate rises from RM1,700 to RM2,000, effective June 2027, but micro, small and medium enterprises with annual sales below RM50 million will be exempted.

Q: Is the RM2,500 starting salary for graduates already law?

A: No, it is a proposed starting wage of RM2,500 for semi-skilled workers and graduates, and no start date was given in Bernama's budget report.

Q: Who is not covered by Malaysia's minimum wage order?

A: The current order shall not apply to a domestic servant, and the new RM2,000 rate will not bind MSMEs with sales revenue below RM50 million.

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