Budget 2027: Minimum wage increased to RM2,000

KUALA LUMPUR, Oct 9 — The Malaysian Employers Federation (MEF) today welcomed the federal government’s decision to raise the national minimum wage to RM2,000 while exempting micro, small and medium enterprises (MSMEs) with annual sales of less than RM50 million.

The new rate, effective June 2027, was announced earlier by Prime Minister Datuk Seri Anwar Ibrahim during the tabling of Budget 2027.

MEF senior adviser for government, media and international engagement Datuk Syed Hussain Syed Husman said a balanced approach was essential to ensure efforts to improve workers’ welfare did not inadvertently undermine business viability, discourage hiring or put existing jobs at risk.

“Providing employers until June 2027 is a sensible step that gives businesses the time to plan, adapt and prepare for implementation while minimising disruption to employment and business operations.

“MEF believes that a reasonable transition period, combined with appropriate support for MSMEs, will help ensure that the objective of improving workers’ incomes can be pursued alongside business sustainability and job security,” he said in a statement.

Explaining further, Syed Hussain said a responsible wage policy focuses not only on the extent of wage increases but also on ensuring businesses can sustain those wages, protect existing jobs and continue creating new employment opportunities.

He also noted that while the minimum wage establishes the statutory wage floor, it should not be the ceiling for employers who can afford to pay more.

“MEF encourages employers to reward employees in line with their business performance, productivity, skills and contributions.

“At the same time, we must recognise that businesses have different financial capacities, particularly among MSMEs.

“The ultimate objective is to build sustainable businesses that can continuously create quality jobs and provide better wages for Malaysian workers,” he said.

Regarding the MSME exemption, Syed Hussain said such measures reflect an important recognition that wage policies must account for the differing financial capacities of businesses, particularly smaller enterprises that operate with tighter margins and limited resources.

“While larger businesses may have greater financial capacity to absorb higher labour costs, smaller enterprises often face more significant constraints arising from rising operating expenses, limited access to financing, productivity gaps and the challenges of adopting new technologies.

“An exemption for eligible MSMEs would provide these businesses with greater flexibility to strengthen their financial positions, improve productivity and prepare for future wage adjustments without compromising their ability to sustain employment,” he said.

Nevertheless, Syed Hussain said any exemption should be supported by clear eligibility criteria, transparent implementation guidelines and adequate communication to employers and employees.

This includes clarification on how the annual sales threshold of RM50 million will be assessed, the treatment of related companies and the application of the exemption to different business structures.

He said MEF also proposed that the federal government strengthen complementary measures to help businesses improve productivity and pay higher wages over the longer term.

These include targeted productivity incentives, support for digitalisation and automation, skills development and measures to reduce the cost of doing business, particularly for MSMEs.