In Budget 2027, the government announced that Malaysia’s minimum wage will rise from RM1,700 to RM2,000 a month, from June 2027 — a jump that will benefit over four million workers. But there’s an important catch for smaller businesses: many SMEs won’t have to pay it straight away. Here’s exactly what was announced, who has to pay, who’s exempt, and how to prepare — with the figures verified against the Budget 2027 announcement.
What Was Announced
Tabling Budget 2027 on 9 October 2026, Prime Minister and Finance Minister Datuk Seri Anwar Ibrahim announced an increase to the national minimum wage:
| Monthly minimum wage | |
|---|---|
| Current | RM1,700 |
| From June 2027 | RM2,000 (+RM300) |
That’s a RM300 increase for a worker currently on the RM1,700 floor. Employers are given a transition period until June 2027 to prepare. (For the current rules, see our guide to the RM1,700 minimum wage.)
Who Must Pay — and Who’s Exempt
This is the part employers need to read carefully. The RM2,000 rate does not apply to everyone from June 2027:
- Larger businesses — those with annual sales of RM50 million or more — are expected to pay the RM2,000 minimum wage from June 2027.
- SMEs with annual sales below RM50 million are exempted for now, to give them more time to adjust their business models and wage structures.
What It Costs in Ringgit
The headline is +RM300 a month per affected worker — but the real cost is a little higher. Because statutory contributions are based on wages, a higher salary also lifts the employer’s EPF, SOCSO and EIS contributions. So budget for the RM300 plus the extra on-costs on top. For a worker moving from RM1,700 to RM2,000, that’s an additional RM300 in wages before the statutory add-ons.
The Other Wage Measures in Budget 2027
The minimum wage wasn’t the only pay measure announced. Budget 2027 also proposed:
- A starting wage of RM2,500 for graduates and semi-skilled workers.
- Government-linked investment companies (GLICs) and GLCs raising their living wage benchmark to RM3,400.
Together, these signal a clear direction: wage floors across the board are being pushed up over the next couple of years.
How Employers Should Prepare
- Check which side of the line you’re on — is your annual sales RM50 million or more (pay from June 2027), or below (exempt for now)?
- Model the cost — identify staff below RM2,000 and budget the increase plus the higher EPF/SOCSO/EIS on-costs.
- Review wage structures — a higher floor can compress differentials, so plan how it affects workers just above the minimum too. (See our guide on salary increments.)
- Don’t forget part-timers — the minimum wage floor applies on a pro-rated basis. (See part-time pay rates.)
- Watch for the Minimum Wages Order — act on the gazetted rules, not just the Budget speech.
Where Pandahrms Helps
When the minimum wage changes, every affected payslip has to move with it — and so do the contributions on top. Pandahrms lets you update the pay rate across affected employees and recalculates EPF, SOCSO, EIS and PCB automatically, so the new minimum flows through correctly from the first pay run. Instead of reworking each employee by hand, you set the new figure and the system keeps every payslip compliant — ready for June 2027 when it’s your turn to comply.
Final Thoughts
RM2,000 from June 2027 is a meaningful jump from RM1,700 — but the staggered rollout means the timing depends on your company’s size. If your annual sales are RM50 million or more, start planning the RM300 increase (and its on-costs) now; if you’re a smaller SME, you have more breathing room, but the direction is clear. Either way, keep an eye out for the gazetted Minimum Wages Order so you act on the final rules.
Frequently Asked Questions (FAQs)
- What is Malaysia’s new minimum wage and when does it start?
Budget 2027 announced an increase from RM1,700 to RM2,000 a month, effective June 2027, benefiting over four million workers. - Does every employer have to pay RM2,000 from June 2027?
No. Businesses with annual sales of RM50 million or more are expected to pay it from June 2027, while SMEs with annual sales below RM50 million are exempted for now, to allow time to adjust. - Is the SME exemption permanent?
It was described as temporary (“for now”) and subject to review — not a permanent exemption. The final scope and dates will be set in the gazetted Minimum Wages Order. - How much more will it cost employers?
For a worker on RM1,700, it’s +RM300 a month in wages, plus the higher EPF, SOCSO and EIS contributions that come with a higher salary. - Were there other wage measures in Budget 2027?
Yes — a proposed RM2,500 starting wage for graduates and semi-skilled workers, and a RM3,400 living wage benchmark for GLICs and GLCs.
Source: Budget 2027 (Belanjawan 2027) announcement, tabled by the Prime Minister and Finance Minister on 9 October 2026, as reported by national media (e.g. The Star, Bernama). Figures are policy announcements; the exact scope, definitions and effective date will be set out in the gazetted Minimum Wages Order. This article is general information, not legal advice.
