The press release stated that a total of 4.37 million workers in Malaysia will now receive a minimum monthly wage of RM1,700, up from RM1,500, following the implementation of the new Minimum Wage Order, effective 1 Feb 2025.
But it’s not just a RM200 increase – statutory contributions and overtime rates will also rise. So, let’s assume employees averages 30 hours overtime per month…
In terms of numbers, that would be:
📈 Income increase:
• Wage increase: RM200 x 4.37 mil x 12 mths = RM10.49 billion per annum
• Overtime rate increase: RM1.44 x 30 hrs x 4.37 mil x 12 mths = RM2.27 billion per annum
✅ Total Wage Increase: RM12.76 billion per annum
💰 EPF Contributions:
• Employer EPF increase: RM26 x 4.37 mil x 12 mths = RM1.36 billion per annum
• Employee EPF Contribution increase: RM22 x 4.37 mil x 12 mths = RM1.15 billion per annum
✅ Total EPF Contributions: RM2.51 billion per annum
🏥 SOCSO Contributions:
• Employer SOCSO Contribution increase: RM3.50 x 4.37 mil x 12 mths = RM183.43 million per annum
• Employee SOCSO Contribution increase: RM1.00 x 4.37 mil x 12 mths = RM52.44 million per annum
✅ Total SOCSO Contributions: RM235.87 million per annum
📊 Total Cost Increase per Employee:
Wage + Overtime + EPF Contribution + SOCSO Contribution = RM272.70 per month
➡️ RM3,272.40 per annum per employee
A healthy wages-to-revenue ratio is around 15% to 30%, meaning businesses should aim for a revenue increase of RM10.9K to 21.8K per employee.
For a kopitiam with around 10 workers, this translates an additional RM9.1K to RM18.2K in revenue per month to maintain profitability.
🚀 Looking ahead…
Over the past 10 years, we’ve seen an average increase of RM160 for every 2.2 years.
So it’s pretty fair to assume that in another 3 years, we might see another RM200 increase per employee.
Businesses need to start preparing now.
Matilah, confirm my Teh-O-Ais limau will naik harga min RM0.30 to cover this. 🥲
#DugaanInflation
