Malaysia’s New Minimum Wage Rate for 2025: What Employers and Workers Need to Know

Posted by Written by Ayman Falak Medina Reading Time: 2 minutes

Malaysia has officially revised its minimum wage policy for 2025, introducing a significant increase that aims to improve living standards and support economic growth. The government’s decision, announced by Prime Minister Datuk Seri Anwar Ibrahim during the 2025 Budget presentation, reflects Malaysia’s commitment to ensuring fair compensation for workers across various sectors. The first phase of the policy has been in effect since February 1, 2025.

What’s new?

The new minimum wage rate has been set at 1,700 ringgit per month, up from the previous 1,500 ringgit. This increase is expected to benefit over 1.5 million workers, especially those in urban areas where the cost of living has been rising steadily.

Implementation timeline

The implementation of the new wage structure will take place in two phases:

  • Phase 1 – February 1, 2025:
    Companies with five or more employees or those involved in professional services, regardless of staff size, must comply with the new rate immediately.
  • Phase 2 – August 1, 2025:
    All remaining businesses, including small enterprises with fewer than five employees, will be required to adopt the new minimum wage.

This phased rollout gives smaller businesses more time to adjust to the new requirements without disrupting their operations.

New daily and hourly rates

The minimum wage structure also adjusts daily rates based on the number of working days per week:

  • 6 working days per week: 65.38 ringgit per day
  • 5 working days per week: 78.46 ringgit per day
  • 4 working days per week: 98.08 ringgit per day

For those working hourly, the minimum wage now stands at 8.72 ringgit per hour.

Who is exempted?

Domestic workers, including maids, gardeners, and personal drivers, are exempt from the new minimum wage order. This exemption has raised concerns among labor rights groups, but the government has indicated that further reviews on domestic worker wages will be conducted in the near future.

Why the increase?

The wage hike aligns with Malaysia’s long-term economic reforms. Rising inflation, growing living costs, and calls for wage equity have pushed the government to review and raise the minimum wage. According to the Ministry of Human Resources, the new rate is designed to help employees meet their basic needs while contributing to economic productivity.

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Prime Minister Anwar Ibrahim emphasized that fair wages are essential for maintaining social stability and reducing income disparity. The new wage policy also complements Malaysia’s goal of becoming a high-income nation by 2030.

Implications for employers

Employers must comply with the new wage policy within the specified timeline. Failure to do so could result in penalties under the National Wages Consultative Council Act 2011 (Act 732), which allows for fines or other legal actions against non-compliant businesses.

Companies should:

  • Review their current payroll systems and adjust salaries accordingly.
  • Prepare for potential increases in operational costs and plan budgets ahead of time.
  • Consider automating payroll processes to ensure compliance.

Final thoughts

Malaysia’s decision to raise the minimum wage is a step toward ensuring a fairer distribution of wealth and improving the standard of living for low-income workers. While businesses may face short-term financial adjustments, the long-term economic benefits—such as increased consumer spending and improved worker productivity—are expected to outweigh the initial challenges.

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