Minimum Wage in Malaysia: Is It Enough?
The minimum wage in Malaysia is often a subject of debate among employees and employers. The end outcome that everybody wants to know is whether the current minimum wage is enough for basic living expenses in Malaysia.
Effective 1st January 2023, the minimum salary in Malaysia was reviewed via the Minimum Wages Order 2022 and it was determined that the new minimum salary will be changed from RM1200 to RM1500. That’s a RM300 hike.
Great news indeed but a short-lived one.
Why?
This is because of the obvious reason that Malaysians know for a fact that RM1500 is not enough to live a moderately comfortable live in Malaysia.
Minimum Wage In ASEAN.
Some may argue that the minimum wage in Malaysia is comparatively higher than most ASEAN countries. That is a true statement. Let’s look at the numbers.
| Country | Minimum Wage (USD) |
| Malaysia | 344 |
| Indonesia | 311 |
| Philippines | 321 |
| Thailand | 301 |
| Vietnam | 197 |
While the numbers may show that Malaysia is much better off than other neighboring countries, we cannot use these statistics to be happy about the state of our lower income employees. We are not Indonesia or Thailand. We need to worry about the living standards in our own country.
The Real Take Home Pay for RM1500.
We all know that when you work in any company, your basic salary is not going to be the exact salary that you’re going to take home as the full pay. Under the Malaysia Employment Law, your monthly salary is subject to three mandatory deductions. These are:
- EPF
- SOCSO
- EIS
Let’s do a quick calculation to find out your actual take home pay if your basic salary is RM1500.
| Deductions | Amount (RM) |
| EPF | 165 |
| SOCSO | 7.25 |
| EIS | 2.9 |
The total deductions are RM175.15. After all these deductions you are left with RM1324.85.
That’s your salary for the whole month. If you divide RM1324.85 with 30 days, that comes to RM44.16. per day. That’s how much you can actually spend per day.
What About the Fixed Monthly Expenses?
Hold on for a second. RM44.16 spending budget per day is not entirely accurate because you will have fixed monthly expenses. The general monthly fixed expenditure would be as below:
- House rental or house installment
- Utility cost such as TNB, PBA, Indah Water
- Car or motorcycle payment
- Petrol cost or EV battery charging cost
- Transportation cost like bus, MRT, Grab
So, let’s assume all that comes to a very modest RM 500.You minus that out from RM1324.85 and you are now left with RM 824.85. That means for the next 30 days, you have RM27.50 to spend every day.
If you spend RM15.00 for all of your three meals per day, you now have a balance of RM12.50 for the rest of the day.
What can you do with RM12.50?
What happens if there’s an emergency? How can you ever save money or buy other things? How can you afford a medical card? These are serious questions that needs to be answered by the authorities.
The Reality of Price Hike in Malaysia.
The inflation rate, according to a report by Bank Negara Malaysia in 2024 is about 1.9%.
Let’s all be frank about this.
Once the price of goods increases, it will not come down. In Malaysia, prices follow the upward trend of inflation but rarely the downward trend. Therefore, the living expenses in Malaysia is bound to get more expensive year on year.
We have tariff hikes in electricity in 2024. We have the diesel subsidy cut in June 2024. These may be good economical tactics to boost the growth of revenue for the country, but it impacts the price of goods. With this kind of inflation and price hikes, there is no way somebody with a base salary of RM 1500 would be able to survive or even lead a moderately comfortable life.
What Can Companies and Authorities Do?
Companies must take responsibility and begin reviewing employees’ salaries to ensure fair pay.
It should start with the Government to take a brave move to ensure that the minimum salary is at a level that is acceptable to the standard of living in Malaysia.
The Domestic Trade and Cost of Living Ministry has to do more in enforcement and ensuring that price hikes are strictly controlled. People need to have accessible platforms to provide feedback and complaint on price hikes.
At the same time employers have to be more responsible in not just looking at the profit side of the business but also at the welfare of their lower income employees.
Some may argue that employees are paid this type of salary based on their productivity. However, we know that most jobs that pay low wages like this are usually labor-intensive jobs that require a lot of energy from the employee to complete a task.
Therefore, while paying higher than the minimum wage may not make business sense to the employer, it presents a humane argument for why they should seriously consider offering a salary significantly above the government-mandated minimum wage.
Conclusion
Employees are the backbone of any organization. Every organization says that however lip service is not going to be enough.
Statement like this needs to translate into action.
Even if the employer feels that the job does not warrant a pay higher than RM 1500. They have to look beyond the job and the productivity. They need to view the employee as a person, as a human who is trying to live his or her life. Can this person survive on RM 1500 a month?
The actual comfortable number for a minimum wage in Malaysia should be at least RM 2000. That should be the starting point of any salary in Malaysia.
Will that make the labor price in Malaysia much more expensive? Probably it will but employers need to find ways to make their work process more efficient and more productive.
