Malaysia recently introduced several developments concerning employee wages, namely:

• The Minimum Wages Order 2024 [P.U. (A) 376/2024] will take effect in stages starting from 1 February 2025 affecting private sector employers in Malaysia¹.
• Registration for voluntary participation in the Progressive Wage Policy (Dasar Gaji Progresif) is now open to eligible private sector employers, excluding Government-linked companies and multinational corporations ².
• The Ministry of Human Resources will publish starting salary guidelines for all employment sectors based on the Malaysia Standard Classification of Occupations (MASCO)³.

How do these developments intersect with ESG and sustainability?

“…[Assess] the benefits and challenges of paying a living wage …, gradually bridging the wage gap …, and striving for a mutually beneficial outcome aligned with the living wage concept.”

Living Wage: A Part of Sustainability and Human Rights Agenda

A living wage is the income necessary to afford a decent standard of living for workers and their families, taking into account national circumstances and calculated based on work performed during normal hours⁴. A country’s minimum wage standard does not always allow for a decent living because, for instance, it is not adjusted frequently enough to keep up with the rising costs of living and it commonly applies across all geographical areas despite differences in costs of living⁵.

Businesses are called to ensure workers in their workplaces and supply chains are paid a living wage as part of the broader Sustainable Development Goals (SDGs) under the United Nations 2030 Agenda for Sustainable Development, in particular, Goal 1: No Poverty and Goal 8: Decent Work and Economic Growth, as well as Goal 5: Gender Equality and Goal 10: Reduced Inequalities⁶.

Provision of a living wage also aligns with corporate responsibility to protect and respect human rights, as outlined in the UN Guiding Principles on Business and Human Rights (UNGPs). The lack of a living wage may impact certain rights outlined in the Universal Declaration of Human Rights and various international conventions, such as the right to enjoy just and favourable conditions of work, the right to an adequate standard of living, the right to rest and leisure, the right to protection of family and children, and the right to health⁷.