Increase in labor costs for employers following the Budget 2025 announcements

      

In May 2022, the minimum wage was increased from RM1,200 to RM1,500. Now, two (2) years later, it has been increased once again. With effect from 1 February 2025, the minimum wage for all employment sectors in Malaysia will be increased from RM1,500 to RM1,700. 

    

Employers with the head count of less than five (5) employees will be granted a six (6)  months deferment period, making the new wage effective 1 August 2025.

    

In view of the definition provided in the National Wages Consultative Act 2011, those under apprenticeship will be not be entitled to the minimum wage.

     

During the Budget 2025, it was announced that EPF contributions will be made mandatory for all foreign workers. This is to promote wage equality in the country. The term foreign workers is to include expatriates following the Employment Act 1955. 

      

No time line or further details have been provided by the Government at this juncture. We expect this implementation to be phased gradually.