Budget 2027: RM2,500 Starting Salary for Graduates and Semi-Skilled Workers. What Employers Should Know

Alongside the higher minimum wage of RM2,000, Budget 2027 announced a second wage measure that could matter even more to employers hiring young talent. The government will introduce a minimum monthly wage of RM2,500 for semi-skilled jobs and for graduates, as the first step in reforming the workers’ income framework.

What was announced

The Prime Minister said that the national minimum wage only raises the income floor, while wages for skilled workers remain out of line with their qualifications. The RM2,500 baseline is meant to narrow that gap by setting a higher starting point for:

• Semi-skilled employees
• University graduates

This is separate from the RM2,000 national minimum wage, which takes effect in June 2027.

How is it different from the RM2,000 minimum wage?

What is still unclear

The slide’s cautions are well placed, because several key details have not been confirmed. Employer and worker groups have asked the government to clarify the job categories covered, which employers are covered, the effective date and how the rate will be implemented. Reports also note that the budget did not say which jobs count as “semi-skilled”.

Guidelines from the Human Resources Ministry

The Human Resources Ministry (KESUMA) has said it is preparing special guidelines to support the rollout. It has also said it is developing a starting basic salary framework covering graduate-level jobs (degrees, diplomas and advanced skills diplomas) and skills-based jobs, and it aims to publish the guidelines alongside the Minimum Wage Order in June 2027. The ministry has also pointed out that the Employment Act currently has no provision for setting minimum wages by educational qualification, so any mandatory rule would need further steps. This is an area to watch.

A related change for salary deductions

Another measure in the budget affects payroll for non-MSME companies. To curb the hiring of undocumented foreign workers, companies other than MSMEs will only be able to claim a tax deduction for salary expenses if wages are paid through bank accounts, using the channels permitted under the Employment Act 1955. The requirement applies only to salary expenses, not to other deductions. Larger employers should make sure their payroll processes meet this requirement before it takes effect.

The bigger direction: higher pay expectations

Government-linked investment companies (GLICs) and government-linked companies (GLCs) will also raise their living wage benchmark from RM3,100 to RM3,400 a month, benefiting about 230,000 workers. The Prime Minister encouraged private employers to review their own salary structures. Taken together, these measures point towards higher pay expectations for entry-level talent.

What employers should do now

1. Map your roles. Identify which roles are semi-skilled or graduate-level and what you pay today.
2. Model the cost. Estimate the impact of RM2,500 on salaries, EPF, SOCSO and EIS contributions.
3. Review pay structures. A higher starting salary can compress pay gaps with existing staff, so consider how to keep fairness across levels.
4. Check payment channels. Confirm that salaries are paid through bank accounts, with proper records.
5. Watch for the guidelines. The details are expected to be clarified around the time the new Minimum Wage Order takes effect.

Speak to AdrianYeo Tax

Wage changes affect payroll costs, tax deductions and cash flow. Our chartered accountants can help you plan for Budget 2027 and keep your records in order.