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Malaysia’s Progressive Wage Policy Officially Implemented

Posted LnCoadmin

Starting January 2025, Malaysia will implement the Progressive Wage Policy (PWP).
The initiative is designed to help employers reduce the cost burden when adjusting employees’ salaries, while enabling employees to enjoy fairer wage growth supported by training that enhances skills and work performance.

FAQ:

1. What is PWP?

The Progressive Wage Policy is supported by SOCSO and applies to local full-time employees earning between RM1,700 and RM4,999.
It covers most industries, excluding public administration, domestic employment, and multinational organizations.

2. Who (Employer) is eligible to apply for PWP?

To qualify as a Progressive Wage Employer, your company must:

✅ Be a local company (≥51% Malaysian-owned)

✅ Be registered with SSM / Local Authority / relevant body, and registered with SOCSO & EPF

✅ Employ Malaysian citizens only, under full-time contracts of service

✅ Pay a basic salary between the current minimum wage and RM4,999/month

✅ Operate in any sector except public administration & defence, household or domestic activities, and extraterritorial organisations

❌ Government-linked companies (GLCs) and multinational companies (MNCs) are not eligible

3. How much can new employees get?

  • Salary range: RM1,700 – RM4,999
  • Incentive up to RM200 per month
  • Maximum claim period: 3 years
  • Incentive amount matches the salary increment but is capped at RM200 (can be claimed in stages until capped)

4. How much can existing employees get?

  • Salary range: RM1,700 – RM4,999
  • Incentive up to RM300 per month
  • Maximum claim period: 3 years
  • Employers must provide at least 6% annual salary increment

5. Is there any other terms & conditions?

Training Requirement

To be eligible, employees must complete:

  • At least 21 hours of training annually, or
  • A total of 42 hours across 2025–2026 (hours can be carried forward)

Training may include:

  • Physical courses
  • Online learning
  • In-house training
  • RPA (Recognition of Prior Accreditation): recognition of employees’ past work experience or achievements without repeating training

 

6. How many employees can receive the incentive?

All eligible employees have the opportunity to receive the incentive.

There is no limit to the number of employees per company, but each employee must individually meet the eligibility criteria.

To qualify, employees must be Malaysian citizens and full-time employees under a contract of service.

⚠️ Incentive payments are subject to government allocation and follow a “first come, first served” basis.
 For 2025, the government has allocated RM200 million, aiming to benefit 50,000 employees nationwide.
 Therefore, even if a company has more eligible employees, incentives will only be granted while funds are still available.

The Progressive Wage Policy offers benefits for both employers and employees:

  • Employers receive SOCSO support to ease the cost of salary increments
  • Employees enjoy salary growth while enhancing their skills and career opportunities

This policy provides a structured approach to wage progression while supporting a stronger, more competitive Malaysian workforce.

**Last updated by 04.11.2025