Increasing Minimum Wage to RM1,700 Can Significantly Improve Living Standards

KUALA LUMPUR: The decision to raise the minimum wage from RM1,500 to RM1,700 starting February 1, 2025, is expected to positively affect people’s living standards.

Economic analyst Assoc Prof Dr Ahmed Razman Abdul Latiff noted that this change, which Prime Minister Datuk Seri Anwar Ibrahim announced while presenting Budget 2025, would enhance workers’ purchasing power, ultimately benefiting the economy.

“By increasing the minimum wage, individuals will have the ability to buy healthier food, find better housing, and save or invest their earnings,” he explained during an interview with Bernama.

He also highlighted that this wage increase would benefit retailers as consumers will have more money to spend.

During the Budget 2025 presentation on Friday (Oct 18), Anwar, who is also the Finance Minister, mentioned that the implementation of the RM1,700 minimum wage would be deferred for employers with fewer than five employees until August 1, 2025.

On the other hand, financial expert Prof Datuk Dr Nik Maheran Nik Muhammad emphasized that raising the minimum wage could help close the income gap between low and high-income earners, promoting social well-being.

“Implementing a higher minimum wage is a wise choice, as it has the potential to enhance livelihoods and purchasing power, leading to economic growth in the nation.”

“Workers will be able to meet basic needs like food, shelter, and education, which will subsequently drive demand for various goods and services,” he noted.

Additionally, he stated that this wage increase might encourage workers to be more productive, as they would feel valued and motivated to work harder.

However, Dr Nik Maheran, currently with Universiti Malaysia Kelantan, cautioned that small and medium enterprises (SMEs) could face challenges in managing the higher wage costs.

“The government should implement adjustments in other policies, such as tax incentives, to mitigate any negative effects from the wage increase.”

“In a fluctuating economic context, a higher minimum wage could be risky if it is not matched by ongoing economic growth,” he concluded. – Bernama