The Malaysian government plans to conduct a comprehensive evaluation of its progressive wage policy by the end of this year or early next year to assess its impact on raising workers’ wages. The policy, currently in its implementation phase, is set to conclude by the end of 2027.
Economy Minister Akmal Nasrullah Mohd Nasir emphasized the importance of this assessment in determining the government’s future steps regarding wage policy. He highlighted that the initiative should focus not only on incentivizing wage increases but also on improving productivity, enhancing training, and upgrading workers' skills. The minister also noted that employer participation in the policy remains voluntary, allowing flexibility for firms to implement the policy according to their individual capabilities and needs.
Citing the Malaysia Salary and Wages Survey Report 2025 by the Department of Statistics Malaysia (DOSM), Akmal Nasrullah pointed out that real wages have continued to grow despite inflation, with a recorded 3.3% increase resulting in an average real wage of RM2,104. However, he cautioned that wage increases alone may offer limited benefits if the cost of living is not effectively managed. The minister stressed the need to consider wage levels alongside living expenses, which differ depending on location and household requirements such as housing, food, transportation, and education.
He further discussed the issue of wage compression in the labor market, noting that the wage gap between unskilled and semi-skilled workers has narrowed from RM550 in 2016 to RM396 in 2024. This trend suggests that wages for semi-skilled workers may not have increased adequately in recent years. To address this, the minister said efforts to raise incomes must extend beyond the minimum wage framework by improving career progression and income growth prospects for workers at successive skill levels.
The government’s ongoing focus appears to be on ensuring that wage policies are balanced with broader economic factors and are responsive to the diverse needs of the labor market and workforce development. The forthcoming assessment will provide key insights to inform future policy decisions aimed at supporting sustainable wage growth and improving the standard of living for Malaysian workers.