Malaysia’s minimum wage is heading to RM2,000 a month from June 2027. Alongside that increase comes a safeguard that matters to the shop around the corner: qualifying micro, small and medium enterprises with annual sales below RM50 million are exempted from the new rate while they adjust their business models.
Prime Minister Datuk Seri Anwar Ibrahim announced the change in Budget 2027 on 9 October, saying more than four million workers would come under the new rate. The RM300 increase is about 17.6% above RM1,700.
For Human Resources Minister Datuk Seri R. Ramanan, the work has involved bringing the wage proposal through the government’s decision-making process while keeping smaller employers’ capacity to pay in the conversation.
And employers themselves have acknowledged that involvement.
The employers’ federation specifically credited Ramanan
In its response to Budget 2027, the Malaysian Employers Federation thanked Ramanan for advocating the exemption for MSMEs with annual sales below RM50 million.
MEF senior adviser Datuk Dr Syed Hussain Syed Husman described the safeguard as a “timely and pragmatic initiative”. He also welcomed the preparation period before the new rate begins, allowing employers to examine wage structures, financial implications and operational arrangements.
That acknowledgement gives a concrete picture of Ramanan’s contribution: supporting better pay while making sure the realities of smaller businesses are heard.
His involvement also predates the Budget announcement. On 29 September, Ramanan told Bernama he had submitted the Cabinet memorandum seeking a decision on the wage rate. At that stage, he cautioned against treating circulating figures as a government decision before Cabinet approval. Bernama
The final announcement came from Anwar. The policy process also involved the National Wages Consultative Council, whose chairman, Tan Sri Zainal Rahim Seman, said studies and engagement with workers, employers and academics informed its recommendations. Bernama
The calculation starts with everyday costs
The discussion has moved on from August’s question of whether the rate would rise.
In a parliamentary reply on 19 October, reported by Human Resources Online on 22 October, Ramanan identified five indicators informing wage-setting: poverty-line income, median wages, labour productivity, the Consumer Price Index and unemployment.
He also said survey findings showed rising costs for food, housing and transport. His emphasis was on strengthening purchasing power through an evidence-based approach.
Those are familiar pressures for anyone dividing a salary between rent, groceries and getting to work. The useful question is how much more a worker can afford after the bills are paid.
Ramanan has also explained why the government considered prices and inflation before settling on RM2,000. Speaking on 16 October, he said the council’s findings had been brought to the Prime Minister and Cabinet, and stressed giving businesses time to adjust systematically.
What the small-business exemption means
The exemption covers the increase to RM2,000. Ramanan clarified on 16 October that the minimum wage for exempted employers remains RM1,700.
He also addressed an important detail for businesses with subsidiaries: sales turnover will be assessed across the company group, rather than looking at each subsidiary separately. The announced threshold concerns sales revenue, rather than a company’s profit.
For owners, that makes checking their position more useful than guessing from the size of a shopfront. A business within a larger group needs to understand the group-level assessment.
For a covered employer with ten workers currently receiving RM1,700, the increase to RM2,000 would add RM3,000 a month to basic wages alone. That is an illustration of the payroll calculation, not a claim that every business must make that adjustment immediately.
The preparation period gives employers space to examine those costs, plan staffing and improve how their businesses operate. The exemption gives qualifying smaller firms additional room to adapt.
A wage increase must reach the payslip
Ramanan’s ministry is also working on how wages are monitored.
On 16 October, he said KESUMA was refining an e-Wages mechanism intended to strengthen labour-law enforcement and reduce unpaid, delayed, incorrect and below-minimum wage payments. Coverage of non-citizen workers was also proposed.
The system was still being developed in that announcement. Its effectiveness will depend on implementation; a monitoring plan cannot yet be counted as wages recovered or complaints resolved.
For workers, the practical test is straightforward: the correct pay arriving when it should.
Breathing room should lead somewhere
Protecting smaller businesses and improving their employees’ wages need to move together over time.
Parliament’s draft record for 21 October includes questions about how long the MSME exemption would last and what transition arrangements would eventually help employees in smaller firms benefit from higher pay. Those are useful implementation questions for Ramanan and the government to answer clearly.
There is also a proposal to measure the results. On 12 October, government backbenchers’ club chair Datuk Seri Dr Zaliha Mustafa called for assessments six and 12 months after implementation, looking at wages after inflation, employment, working hours, productivity and business conditions. That remains a proposal, rather than a confirmed evaluation programme.
Ramanan has a documented role in advancing the wage decision and advocating the small-business safeguard. The next opportunity is to carry that balance into the rollout: clear rules for owners, dependable enforcement for workers, and a route for smaller firms to afford better wages.
For the worker and the shop owner alike, success should be visible in everyday life: more spending power, wages paid properly and businesses able to keep people employed.
Sources & further reading
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