Malaysia’s formal sector workforce continued to record steady wage growth in the third quarter of 2025. The median monthly wage for 7.06 million formal employees rose to RM2,864 in September 2025, reflecting ongoing improvements in pay alongside stable job growth in the formal economy.

Formal Sector Wages Continue Upward Trend

The national median monthly wage increased by 4.3% year on year, up from RM2,745 in September 2024. This rise came alongside a 3.5% increase in the number of formal employees recorded consistently in July, August, and September 2025, pointing to sustained resilience in the formal labour market.

For households, gradual wage growth can help cushion the impact of higher living costs, particularly for essentials such as housing, food, and transport. While the increase is moderate, it offers some additional flexibility for day-to-day budgeting.

Wage Differences By Gender Remain Visible

Male employees accounted for 55.1% of formal employment, or 3.89 million people, in September 2025. Their median monthly wage stood at RM2,900. Female employees, who made up 44.9% or 3.17 million people, recorded a median monthly wage of RM2,800.

Although the gap is relatively small, it continues to influence longer-term financial outcomes, including savings capacity, insurance coverage, and retirement planning.

Peak Earnings Seen Among Mid-Career Workers

Employees aged 45 to 49 years continued to record the highest median monthly wage at RM3,800 throughout the third quarter of 2025. All age groups experienced year-on-year wage increases, showing that income growth was broad-based across the workforce.

The strongest growth was recorded among employees below 20 years old, whose median monthly wage rose 13.3% to RM1,700. For younger workers, this provides some early income support, although earnings remain below the national median.

Industry Pay Levels Vary Widely

Median wages increased across all economic sectors during the quarter. The Mining and Quarrying sector continued to record the highest median monthly wage at RM6,600 in September 2025, despite employing a relatively small share of the formal workforce.

In contrast, the Agriculture sector recorded the lowest median monthly wage at RM2,245. These differences highlight how industry choice can significantly shape earning potential and influence decisions around career progression and skills development.

Location Plays A Key Role In Earnings

Regional wage differences remain pronounced. Kuala Lumpur recorded the highest median monthly wage at RM4,064, followed by Selangor at RM3,127 and Pulau Pinang at RM2,927. The lowest median wages were recorded in Kelantan and Perlis at RM1,800, while Sabah and Kedah stood at RM2,000.

These gaps continue to affect decisions around relocation, commuting, and housing affordability, particularly as higher wages in urban areas often come with higher living costs.

Wage Distribution Highlights Income Gaps

In September 2025, 8.8% of formal employees earned below RM1,700 per month, marking a clear improvement from the previous year. However, income inequality remains evident. The bottom 10% of formal employees earned RM1,700 or less, while those in the top 10% earned at least RM9,000 per month.

This disparity means higher-income households generally have more room for savings and investments, while lower-income earners may continue to focus primarily on essential spending.

How The Wage Increase Shapes Household Budgeting

The rise in median wages suggests some improvement in take-home pay for many formal employees, which can support more balanced household budgets. Even modest increases may allow families to better manage fixed expenses, such as rent, loan repayments, and utilities, while setting aside small amounts for savings.

However, the data also shows that income growth is uneven. Households earning below the median may still face tight cash flow, making careful budgeting essential. Understanding how personal income compares with national and regional wage levels can help individuals make more realistic decisions around spending, borrowing, and longer-term financial planning.

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