Implementation of RM2,500 minimum wage should not impact allowances or employment terms, says ABIM

KUALA LUMPUR, 10 OCTOBER 2026 —

Malaysia’s RM2,500 Starting Salary Plan Must Protect Workers’ Net Pay, Says ABIM

The Malaysian Islamic Youth Movement (ABIM) has warned that Prime Minister Datuk Seri Anwar Ibrahim’s RM2,500 minimum starting salary for graduates and semi-skilled workers—announced in Budget 2027—must not come at the expense of existing allowances or employment terms, or risk undermining the initiative’s intended benefits for workers.

The call comes as Anwar’s government seeks to reshape Malaysia’s wage framework, with the new rate set to take effect alongside a broader RM2,000 minimum wage hike for all workers by June 2027. ABIM President Ahmad Fahmi Mohd Samsudin stressed that the implementation must ensure workers retain their full compensation, including allowances, while clarifying key details such as affected job categories, employer obligations, and enforcement mechanisms.

The government’s move, unveiled during Budget 2027’s tabling in Parliament on October 9, marks a two-tiered approach: a RM2,000 minimum wage for all workers (excluding MSMEs with annual sales below RM50 million) and a higher RM2,500 baseline for graduates and semi-skilled roles. Anwar framed the policy as necessary to align wages with workers’ qualifications and skills, but ABIM cautioned that without safeguards, businesses—particularly MSMEs—could offset higher base salaries by cutting allowances or altering employment terms.

Ahmad Fahmi acknowledged the financial strain on MSMEs but urged the government to define the exemption’s scope, duration, and worker coverage to prevent exploitation. He called for a transition plan with clear timelines and productivity-linked support to help businesses adapt without sacrificing workers’ rights to fair pay.

"The sustainability of businesses and workers’ right to earn a decent wage must be safeguarded together," he said, emphasizing the need for a balanced approach.

The ABIM leader also highlighted gaps in social protection for gig workers, praising the government-Grab collaboration on maintenance, insurance, and contribution assistance but demanding broader coverage across digital platforms. He stressed that minimum income rates should reflect net earnings after work-related costs, with worker representatives and dispute resolution channels involved in enforcement.

On youth employment, Ahmad Fahmi supported the automatic Employees Provident Fund (EPF) registration at 18 but insisted it must be paired with contribution assistance for low-income young workers. He also advocated for affordable housing near workplaces, mentorship for entrepreneurs, and financing aligned with borrowers’ repayment capacity.

The RM2,500 starting salary, if implemented without erosion of allowances, could reshape Malaysia’s labor market by narrowing wage disparities between skilled and semi-skilled roles. However, ABIM’s warnings underscore the need for rigorous oversight to prevent circumvention, particularly as MSMEs—critical to Malaysia’s economy—adjust to higher labor costs.

With the RM2,000 minimum wage set to take effect in mid-2027, the government’s next steps will determine whether the policy achieves its goal of fairer compensation or becomes a hollow victory for workers. Stakeholders, including unions and business groups, are likely to scrutinize the exemption criteria and enforcement details in the coming months.