When people hear "minimum wage rises from RM1,700 to RM3,100", they picture a RM1,400 increase. For an employer, the real number is bigger — because several statutory costs are calculated as a percentage of the wage. Raise the wage, and they all rise with it. Here is exactly how the ripple works.
The four things that scale with basic wage
- EPF (KWSP). For monthly wages up to RM5,000, the employer contributes 13% and the employee 11%. Both figures are a percentage of wages, so they grow automatically.
- SOCSO (PERKESO). Employment injury and invalidity contributions, roughly 1.75% employer and 0.5% employee, based on the PERKESO contribution table (wage ceiling RM6,000).
- EIS. Employment Insurance System, 0.2% employer and 0.2% employee (ceiling RM6,000).
- Overtime. Under the Employment Act 1955, overtime is based on the ordinary rate of pay (monthly wage ÷ 26). A higher wage means a higher OT rate per hour.
Worked example: RM1,700 vs RM3,100 (employer's monthly cost)
Figures below are illustrative and rounded; SOCSO and EIS are banded in the PERKESO tables, so exact ringgit differ slightly.
| Item | At RM1,700 | At RM3,100 |
|---|---|---|
| Basic wage | RM1,700.00 | RM3,100.00 |
| EPF — employer (13%) | RM221.00 | RM403.00 |
| SOCSO — employer (~1.75%) | ~RM29.75 | ~RM54.25 |
| EIS — employer (0.2%) | ~RM3.40 | ~RM6.20 |
| Total employer cost | ≈ RM1,954 | ≈ RM3,563 |
| Increase vs today | — | ≈ +RM1,609 / month |
So a RM1,400 rise in the headline wage becomes roughly RM1,609 in real monthly cost per employee — about 15% more than the headline — once EPF, SOCSO and EIS are added. Across a team of 20 minimum-wage staff, that is around RM32,000 extra per month.
Overtime rises too
Overtime uses the ordinary rate of pay (ORP = monthly wage ÷ 26), and a normal working-day OT hour is paid at 1.5× the hourly rate:
| At RM1,700 | At RM3,100 | |
|---|---|---|
| Ordinary rate of pay (per day) | ≈ RM65.38 | ≈ RM119.23 |
| Hourly rate (÷ 8) | ≈ RM8.17 | ≈ RM14.90 |
| Normal-day OT (1.5×/hour) | ≈ RM12.26 | ≈ RM22.35 |
Don't forget wage compression
If the floor jumps, employees currently earning a little above it will expect a rise too — otherwise a supervisor could end up on the same pay as a new hire. Budget for that knock-on, not just the workers sitting exactly on the minimum.
Let the system do the maths
GajiHub calculates EPF, SOCSO, EIS and PCB straight from each employee's wage using the official tables, and computes overtime to Employment Act rates. Change a basic salary and every statutory line updates automatically — so you can price a wage increase accurately before you commit. See the news context in Malaysia Minimum Wage 2026: the RM3,100 proposal explained, or try it free.
Rates cited are the standard Malaysian statutory rates at the time of writing and are for illustration; confirm current EPF/SOCSO/EIS tables with KWSP and PERKESO. This is general information, not professional advice.
