RM2,000 minimum wage on the way, but productivity is the real fix, say experts

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Malaysia’s latest minimum wage increase is expected to benefit workers through better incomes, while encouraging businesses to step up efforts to ...

KUALA LUMPUR, Nov 12 — Malaysia’s latest minimum wage increase is expected to benefit workers through better incomes, while encouraging businesses to step up efforts to improve productivity to ensure that higher wages can be sustained without putting further pressure on prices.

CGS International Securities Malaysia chief economist Nazmi Idrus said wage growth had helped workers recover some of the purchasing power lost during the high-inflation period following the Covid-19 pandemic.

He said wages had gradually caught up with inflation, although any fresh increase in prices could erode some of the gains made by households.

“During periods of high inflation post-pandemic, we saw the erosion of spending power.

“That has recovered somewhat as wages have clawed back above inflation, but potentially higher inflation could erode those gains,” he told Bernama.

On the government’s Progressive Wage Policy, Nazmi described it as a good initiative, although its reach remained limited, with only about 50,000 workers currently involved.

He said the programme should be expanded to benefit more workers and help ensure that wage growth was supported by productivity improvements.

According to Bank Negara Malaysia’s Annual Report 2025, despite moderate inflation, many households continue to grapple with higher living costs amid slow wage growth.

To secure better living standards and strengthen purchasing power, income growth needs to outpace price increases.

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