The Prime Minister of Malaysia, Dato’ Sri Ismail Sabri Yaakob, announced on 19 March 2022 that the national minimum wage will be revised to RM1,500 per month from 1 May 2022.¹
 
There is some uncertainty as to the scope of the proposed increase to the national minimum wage. In the announcement on 19 March 2022, the Prime Minister added that “discussions between two ministers would be held to look into delaying the implementation of the policy for small and micro businesses with low income or revenue”.
 
In its report on the Prime Minister’s announcement, another media source cited the Prime Minister as having said that “the increase from the current minimum wage of RM1,200 will only involve companies in the private sector which have five employees or more.” According to the same report, the Human Resources Minister said, “there may be certain sectors which will be exempted from implementing the minimum wage, (and) that this exclusion may be for a period of about two years.”²
 
In a follow-up announcement issued on the following day, the Human Resources Minister said that “The detailed mechanism and implementation of the minimum wage of RM1,500 per month will be announced soon.” This report also suggests that the Prime Minister had said that “the new minimum wage would initially apply to big companies and government-linked companies.”³
 
Reiterating the earlier statements by the Prime Minister and the Human Resources Minister, the Deputy Human Resources Minister, Datuk Awang Hashim, said that “Some businesses may be allowed to postpone or be exempted from implementing the RM1,500 minimum wage which is expected to come into effect on May 1,” and that “The ministry would deliberate on the postponement of the implementation of the new minimum wage for some business sectors, especially micro, small and medium enterprises.” The Deputy Minister added that “Some employers would be given an exemption but this was still being discussed at the ministry level.”⁴
 
Hence, it appears that an increase in the minimum wage will take place on 1 May 2022 although it is uncertain whether exemptions to certain business sectors or employers will apply. The Malayan Trade Union Congress Sarawak Division has in the meantime come out with a strong statement that the wage hike should not exclude any  business sectors. ⁵ It is hoped that the Human Resources Minister will clarify the uncertainties surrounding the scope of the proposed increase as soon as possible to enable affected employers to adjust their business plans accordingly.
 
While employees recognise the need to increase the minimum wage in the country, some employer groups have cautioned that the amount of the proposed increase is too much, and timing of the implementation thereof is too soon.⁶ Amongst the reasons cited are that the jump of 25% is too much for businesses that are not fully recovered from the pandemic to absorb and other costs are increasing amid supply chain disruptions which have also been affected by the Russia-Ukraine war. There is also concern that this hike in minimum wage will contribute to higher inflation which may leave the consumer no better off.⁷
 
Under the Minimum Wages Order 2020 [P.U.(A) 5/2020] (as amended earlier this year by the Minimum Wages (Amendment) Order 2022 [P.U.(A) 14/2022]), Malaysia has adopted a two-tiered minimum wage structure, with the minimum wage of RM1,200 per month for places of employment located within a City Council or Municipal Council area, and RM1,100 per month for places of employment located outside those areas.⁸ It remains to be seen whether this two-tiered structure will be abolished when the revised minimum wage comes into effect. 
 
Alert prepared by Selvamalar Alagaratnam (Partner) and Foo Siew Li (Partner) of the Employment Practice Group of Skrine. 

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