Rafizi Ramli, the Economy Minister, has announced that there are currently no plans to implement a mandatory RM1,500 minimum wage order. Instead, a more progressive wage approach will be adopted to balance the impact on small and medium businesses while still providing better salaries for entry-level graduates in the job market.
He mentioned that there have been extensive discussions over the past seven months regarding whether there should be laws such as a Minimum Wage Order, after which the Cabinet approved a policy for a progressive wage model.
Human Resources Minister V. Sivakumar stated in a written reply that the current two-year minimum wage order is being reviewed in line with the National Wages Consultative Council Act 2011. The minimum wage order was enacted on May 1, 2022, with a monthly minimum wage of RM1,500 for all sectors, regardless of region, for employers with five or more workers.
Rafizi emphasized that 80% of the 1.1 million registered businesses in the country were micro enterprises, while 15% were small businesses and 2.5% each were medium and big businesses. He expressed concern that enforcing a mandatory minimum wage order without government intervention would negatively impact these businesses, possibly causing many to close and leading workers to switch to the informal sector or become contract workers.
Instead, the government’s approach will be based on incentives provided to businesses related to workers’ skill and productivity. Rafizi added that a mandatory minimum wage order would only force employers to focus on paying their employees minimum wages at the expense of offering better salaries for entry-level graduates. He noted that the companies participating in the progressive wage approach are voluntary.
Rafizi also mentioned that the minimum wage is RM1,500 while an entry-level graduate salary is currently RM1,600, further reinforcing the need for a more balanced approach.
Rafizi is set to table a White Paper on Progressive Wages in Dewan Rakyat later Thursday.
