Malaysia Increases Minimum Wage

• The Malaysian government has increased the minimum wage for major towns under 56 city and municipality councils. The new wage hike came into force on February 1, 2020.
• The minimum wage is now 1,200 ringgits (US$283) per month, an increase of 100 ringgits (US$23) from 2019. The rate for employees earning an hourly rate has been increased to 5.77 ringgits (US$1.36) from 5.29 ringgits (US$1.25).
• Foreign investors should seek the help of registered local advisors to help understand how these latest changes will affect their operations.

The Malaysian government has increased the minimum wage for major towns under 56 city and municipality councils. The new wage hike came into force on February 1, 2020.

Employees are now eligible to receive 1,200 ringgits (US$283) monthly, an increase of 100 ringgits (US$23) from 2019. Furthermore, for employees earning an hourly wage, the rate has been increased to 5.77 ringgits (US$1.36) from 5.29 ringgits (US$1.25).

The planned increase was part of the government’s 2020 budget and part of the drive to modernize the country’s workforce.

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Foreign investors should seek the help of registered local advisors to help understand how these latest changes will affect their operations.

Which regions are eligible for the increase?

The 56 city and municipality councils eligible for the minimum wage increase are highlighted in the following table:

Employers should note the minimum wage does not apply to domestic workers.

What does it mean for business?

Increasing the minimum wage was implemented to reflect the rising cost of living in the 56 regions.

Businesses, however, have argued that due to a sluggish economy, increasing the minimum wage will tighten profit margins and encourage layoffs. Moreover, the area-based wage rise could cause possible discrepancies between workers from the 56 regions and those in rural locations.  

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