On 30th April 2012, the Prime Minister announced Malaysia's first minimum wage law.
The law was the result of extensive work done by the Ministry of Human Resources in consultation with the representatives of the employer and the employee groups, the government and economic experts in the National Wage Consultation Council (NWCC).
Minimum wage rate for Peninsular Malaysia is fixed at RM900 per month or RM4.33 per hour, while for Sarawak, Sabah and Labuan Federal Territory of RM800 a month or RM3.85 per hour. The minimum wage will cover all workers in all economic sectors throughout the country, except for domestic services. It is expected to affect some 3.2 million workers in the private sector.
The RM900 minimum wage is 49.9% of the national mean wage of RM1,804.43 in 2010. In setting the minimum wage, the government took into account social and economic considerations: cost of living, productivity, competitiveness and employment.
A grace period will be given to employers to restructure their wage schemes once the new minimum wage is implemented. The minimum wage will take effect six months from the date the Minimum Wages Order is gazetted.
Most firms with five workers or fewer, so-called small-time employers or micro-enterprises are allowed to defer it for a further six months to enable them make the necessary preparation and completely ready so that it will not affect their businesses.
The 12-month grace period does not cover professional outfits such as dental and medical clinics, legal, architecture and consultant firms even if they had 5 workers or lesser.
The Government will also provide a flexible mechanism to allow those employers who are unable to comply with the minimum wage, to seek an extension of the transitional period.
GLCs, under the GLC Transformation Programme, will lead the implementation of minimum wage for Malaysia, as announced by the Government and make it effective as of 1st May 2012.
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Numbers featured within this section are correct as of announcement date.