Malaysia's average monthly income to reach RM3,971 in 2025

SHAH ALAM - The average monthly salary is projected to rise significantly from RM3,529 in 2024 to a range of RM3,971 to RM4,053 in 2025, driven by an increase in the minimum wage to RM1,700 and the implementation of the Progressive Wage Policy (DGP).

According to Future Studies Berhad (The Future) Chairman Professor Dr Mohamad Salmi Mohd Sohod, this would be achieved through the full enforcement of the new minimum wage and the allocation of RM200 million in the 2025 Budget to support the implementation of the DGP.

“This policy aims to increase the wages of workers in low and semi-skilled sectors through a progressive approach, allowing businesses to adjust their cost structures while sustainably raising employee incomes.

“In addition, salary increases for public sector employees also play a crucial role in boosting the overall average salary. This increase creates a domino effect on private sector wage structures, where the public sector often serves as a benchmark for the private sector.

“This situation drives competition to attract and retain quality labour in the private sector, thereby contributing to wage increases,” he told Sinar when contacted.

He added that the minimum wage hike would have a direct impact on low-wage workers, while the DGP aims to structure incremental wage increases, positively affecting various segments of the workforce.

This initiative, he said, would also increase household incomes, reduce income inequality, and contribute to higher domestic demand.

“The government, under the Human Resources Ministry, is planning to issue guidelines for starting wages across all sectors, seen as a positive step in ensuring wages are commensurate with assigned tasks.

“This approach is expected to enhance workforce competitiveness and attract more women and high-skilled workers into the labour market, thereby strengthening overall income,” he said.

Salmi also opined that the government could ensure the alignment between the new minimum wage and the DGP through clear implementation guidelines, compliance monitoring, and skill training programmes to support both workers and employers.

“A suitable transition period, such as the proposed six-month deferment for small businesses, would give employers time to adjust their operating costs.

“The DGP should also be linked to productivity initiatives, including technology training and automation, to ensure wage growth is supported by increased output.

“The adoption of progressive wage increase guidelines, similar to Singapore’s progressive model, which outlines wage increments over a 10-year period, can help employers understand wage escalation pathways and plan long-term costs,” he explained.

As the country approached the final phase of the 12th Malaysia Plan, The Future, through the Center for Future Labour Market Studies (EU-ERA), released a comprehensive analysis of Malaysia’s labour market within the framework of the 2025 Budget.

As the country approaches the final phase of the 12th Malaysia Plan, The Future, through the Centre for Future Labour Market Studies (EU-ERA), has released a comprehensive analysis of Malaysia’s labour market within the framework of 2025 Budget.

Meanwhile, Dr Salmi emphasised that the government should have adopted a phased approach for implementing the minimum wage increase, such as the proposed six-month deferment for businesses with fewer than five employees during the 2025 Budget presentation.

“Financial assistance, such as productivity grants, automation incentives, and government-funded skill training programmes for micro, small, and medium enterprises (MSMEs), will help improve their productivity, making wage increases more sustainable.

“The government could also introduce low-cost loan schemes to help MSMEs manage rising labour costs,” he said.

Salmi also stated that incentives were crucial to help businesses, especially MSMEs, cope with rising labour costs.

“The government can consider productivity grants, training subsidies, and tax incentives for businesses that integrate the DGP and comply with the minimum wage.

“Support schemes such as easy financing for automation and digitalisation, as well as incentives for export markets, can be introduced to mitigate the burden of rising labour costs,” he added.