Talking point

Pre-amble
Policy strategies to improve the condition of the labour market were empirically proof to be
more effective means to enhance the income of poor people and therefore to reduce the
poverty.
This is due to the factors income represent the major sources of household income which
contributed 65% to household income in Malaysia.
Before the implement of minimum wage, 33.8% of the private workers earned wage less than
RM700 per month which the wage is below the poverty line income of RM720 per month in
2007.
Increase wage is vital for Malaysian because the increasing in wage will stimulates consumption
by putting more money in hands of B40 community to enhance purchasing power same as M40
and T20 community.

Sources: Household Income Survey 2016, DOSM

 The background minimum wage
Malaysia implemented a minimum wage policy on 1 January 2013 thereby joining more than
183 other countries that already have minimum wage laws in place.
The policy set a minimum wage of RM900 per month (4.33 per hour) for peninsular Malaysia
and RM800 per month (3.85 per hour) for Sabah, Sarawak and labuan covering both local and
foreign worker.
In 2016, the minimum wage rate increase to RM1000 (RM4.81) for peninsular Malaysia and
RM920 (RM4.42) for Sabah, Sarawak and labuan

Sources: MOHR and BNM

 The effect of minimum wage to worker
The minimum wage policy is estimated to benefit about 27% of worker nationally.
On average, the affected workers in peninsular Malaysia are expected to receive a 33% in wages
while east Malaysia would be given a 38% increment.
The most effective on advantages of minimum wage is agricultural industry which effected as
43% of workers in that sector received above below than normal wage.
The minimum wage also effect productivity labour with growth 3.5% form 1.8% after the
implementation these act.
In 2016, monthly nominal wage in private sector grew by 4.2% supported by increase minimum
wage to RM4.81 per hour.

Sources:BNM
Why we need minimum wage
Fight inequality: to redistribute income among low-income which will have potential to increase
wealth ownership amongst community
Efficient: to promote a more efficient allocation of human capital through productivity among semi
and low skilled worker.
Vision: to increase wage rate in labor market for fulfil government objective of attaining high-income
country status.
empowerment: to removes dependency to foreign worker in labour market Malaysia
Development: spur training to employees to push higher paying jobs and diminish low paying jobs.
Protection: protect the low-skilled worker against any exploitation by earning wage below poverty
line
Motivation: encourages people to join the workforce rather than pursuing money through illegal
mean.