Malaysia Minimum wage up to RM1,700 from Feb 1, 2025: Anwar

Image by Squirrel_photos from Pixabay
By Jennifer Blair

The Malaysian government has approved the increment of the minimum wage rate from RM1,500 (US$335) per month to RM1,700 (US$380) per month, effective February 1, 2025, according to Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim.

 

The change was announced while tabling Budget 2025 in the Dewan Rakyat.

 

A six-month delay will be granted to employers with fewer than five employees, extending the deadline to August 1, 2025.

 

The Human Resources Ministry is set to publish a set of guidelines outlining the starting salaries across all sectors. Suggested starting salaries include:

  • Industrial and production technicians at RM2,290 (US$512)
  • Mechanical engineers at RM3,380 (US$755)
  • Professional creative content designers at RM2,985 (US$667)

 

The Progressive Wage Policy, with a RM200 million (US$44.7 million) budget, is set for full implementation in 2025, benefiting 50,000 workers on the back of its pilot programme in June 2024.

 

The People’s Income Initiative (IPR) would also receive RM250 million (US$55.9 million) in 2025, with the aim of eradicating extreme poverty.

 

Further, the continuation of Skim Perlindungan Tenang was announced benefitting around two million Sumbangan Tunai Rahmah recipients (in collaboration with Bank Negara and the insurance and takaful industries). Eligible individuals can redeem a RM30 (US$6.7) voucher to help offset the cost of Perlindungan Tenang products, which provide coverage for death, personal accidents, and general risks like fire and floods.

 

Background:

  • Since March 2022, the minimum wage in Malaysia has been at RM1,500 (US$335).
  • In May 2022, the Minimum Wage Order (PGM) 2022 was implemented  for employers with five employees or more, with a deferment to June 2023 for those with fewer than five employees.

 

Scope and Expected Changes:

  • Federal revenue is projected to rise 5.5% to RM339.7 billion (US$76 billion) in 2025, up from RM322.1 billion (US$72 billion) in 2024.
  • Total spending for 2025 is set for a 3.3% increase from 2024, at RM407.5 billion (US$91 billion), with RM86 billion (US$19 billion) for development and RM335 billion (US$75 billion) for operating expenses.
  • The economy is expected to grow by 4.5%-5.5% in 2025, while inflation is forecast to stay between 2% and 3.5%, up from 1.5%-2.5% in 2024.
  • The government aims to reduce the fiscal deficit to 3.8% of GDP in 2025, down from 4.3% in 2024, with more aggressive fiscal reforms, targeted subsidies, and expanded tax revenue.
  • New tax measures include broadening the sales and services tax, introducing a 2% tax on dividend incomes above RM100,000 (US$22.3k), enforcing a global minimum tax from 2025, offering tax relief measures for first-time homeowners and other categories, and raising excise duties on sugary drinks, while a carbon tax on key industries will be implemented by 2026.
  • Savings from subsidy cuts and tax adjustments will fund education, healthcare, with increased cash aid for low-income individuals, while subsidy allocations for 2025 will be reduced by 14.4%.

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