RM1,500 Minimum Wage to Take Effect on May 1

Prime Minister Ismail Sabri announced today that the new minimum wage of RM1,500 will take effect starting May 1. He said the increase from the current RM1,200 minimum wage would only affect private-sector companies with five employees or more.

"The cost of living is rising, putting pressure on the B40 group," he told the Umno general assembly.

"I have listened to the discussions and the people's grievances on the issue. I want to announce that the government has decided to implement the new minimum wage of RM1,500 countrywide from May 1."

Ismail said in-depth studies had been carried out regarding the impact of the new measure, especially on micro-, small- and medium-sized enterprises.

The government previously said the revised minimum wage would be implemented by the end of the year.

Sooner than the end of 2022

On March 17, Saravanan said the government would implement the RM1,500 minimum wage in a month or two.

He said the minimum wage, which is an increase from RM1,200 currently, had acquired unanimous support from the Cabinet, which discussed it over the past three weeks. He also said specific sectors would be exempted from implementing the minimum wage, adding that this exclusion may be for about two years.

The minister stated that any exemption would first be studied as the government did not want any announcements on the increase in the minimum wage to lead to a spike in unemployment. The unemployment rate in Malaysia has declined from 5.3% in 2020 to 4.2% presently.

"I do not want employers to take advantage (of the increase) by reducing their workforce by citing business losses.

"We are taking positive actions to identify the sectors that will be exempted, and we will declare (those sectors) in April," he said.

On March 14, Saravanan announced to Dewan Rakyat the government would implement the new minimum wage earlier due to Malaysia's improving economic situation, although the minister had previously said it would be done by the end of 2022.

New minimum wage will kill businesses?

Previously, groups such as the Malaysian Employers Federation (MEF) had said the proposed increase would kill businesses, which were still in the recovery mode.

Its president, Syed Hussain Syed Husman, said most companies were not in a position to enforce the proposed new minimum wage as they were still reeling from the economic shock brought about by the Covid-19 pandemic and the floods at the end of last year.

The minimum wage was last raised in February 2020, from RM1,100 to RM1,200 per month.

Source: FMT