Plantation Workers Can Barely Live on Malaysia’s Minimum Wage

Since 1 February this year, Malaysia has implemented a new minimum wage of RM1,700, up from RM1,500 set in 2022. This legal wage floor applies to all workers, regardless of nationality. A total of 4.4 million workers out of 16.48 million in Malaysia’s workforce are expected to benefit from this minimum wage increase. However, some argue that only 10 per cent of the formal workforce, or 600,000 workers, will see the gains.

While the new minimum wage policy is a positive development, it still falls short of meeting workers’ needs. The policy is weakly enforced in key segments of the workforce, particularly migrant workers in the oil palm plantation sectors who work in remote locations beyond the reach of labour law inspectors. Malaysia’s 400 or so labour inspectors, with fewer than 100 based in Sabah, are under-resourced to monitor the 1.63 million hectares of plantations in Sabah alone. In addition, labour inspectors often lack the capacity and technical knowledge needed to address complex labour issues.

More fundamentally, research shows that the minimum wage is insufficient. In February, the Coalition of Sovereign Migrant Workers (KBMB) released a report, co-researched by this author, on living wages for migrant palm oil plantation workers in Sabah. This sector, one of four key growth drivers of Malaysia’s economic growth, employs around 500,000 documented workers, alongside numerous undocumented migrant workers, mainly from Indonesia and the Philippines. Sabah was selected due to its status as Malaysia’s largest palm oil-producing state and its porous borders which facilitate undocumented migration.

Our research covered three palm oil plantations, with fieldwork conducted on three occasions between mid-2023 and end-2024. The plantations included one mid-sized grower certified by the Malaysian Sustainable Palm Oil (MSPO), and two large growers certified by the Roundtable on Sustainable Palm Oil (RSPO). All three were thus expected to follow guidelines on minimum wage, decent work, and labour rights outlined in the supply chain governance of the MSPO and RSPO.

The study interviewed 46 workers, using a questionnaire to gather data on their wages and basic expenses and to estimate a living wage. We found that many migrant workers, especially harvesters, earn a monthly income of RM1,000-1,300 for working 8-hour days, while women doing spraying, fertilising, and fruit-picking tend to earn RM800-1,000. Only a few manage to earn above the prevailing RM1,500 minimum wage, often by working overtime or taking on multiple jobs — with some even guarding the plantations overnight after a full day’s work. When we checked back with these workers recently, none were earning the new minimum of RM1,700 within normal working hours.

Of their wages, at least RM800 is spent on food. The remainder goes towards transport, communication, healthcare, and children’s education. Food expenses account for around 60 to 70 per cent of take-home pay, significantly higher than the 40 to 50 per cent typically suggested in many living wage benchmarks. Moreover, the food consumed tends to be monotonous, often limited to instant noodles with rice, eggs, dried fish, or cassava leaves. While local shops, markets, and peddlers near the plantations sell other protein sources like meat and fish, workers say these are too expensive. In essence, low wages mean that workers cannot afford nutritious food, resulting in sub-optimal consumption.

The desperate resort to debt, even for basic necessities, suggests that workers’ wages are being suppressed amidst the buoyant growth and profitability of Malaysia’s palm oil plantations.

After observing and recording the actual expenditures of migrant workers, we estimated a living wage for them. A living wage, considered a fundamental human right, is the remuneration a worker receives for a standard working week, sufficient to ensure a decent standard of living for the worker and their family. This includes adequate food, housing, healthcare, education, transportation, and some savings.

Unlike the minimum wage, a living wage is voluntary and not legally mandated. In contrast, the minimum wage is a statutory remuneration that employers are legally required to pay, and it cannot be reduced through individual contracts or collective agreements. Its legal purpose is to protect workers from unduly low pay. Importantly, while the minimum wage is usually calculated based on the needs of an individual worker, a living wage takes into account the needs of a household—ideally a family of four— and considers the number of full-time workers in a family. Notably, the plantation workforce typically comprises family units. In many cases, both spouses are employed, while in others, the wife manages household responsibilities. Children often help in their spare time.

The study used the Anker methodology — a framework recognised globally and preferred by the RSPO— which estimates living wages based on normative standards such as access to nutritious but affordable food, decent housing, healthcare, education, migration-related costs, contingency expenses, and other essentials for a typical family in a specific location, whether rural or urban. The Anker methodology combines statistics and publicly available data with field-based research to produce credible and internationally comparable results.

Using statistics from the government’s household expenditure survey in Sabah and data from research fieldwork, we calculated the living wage and divided it by 1.5 (the average number of full-time workers per family in Indonesia, where most respondents come from). We excluded the cost of housing which is typically provided by the plantation companies. The resulting estimate is a living wage of RM2,235. Interestingly, this figure falls within the minimum wage range of RM2,000 to RM2,500 previously proposed by some Malaysian economists.

These findings align with earlier studies showing that migrant workers, particularly in the domestic and palm oil sectors, earn low and insufficient wages. Our research also found that families of migrant workers often have to buy food on credit from local grocery stores or peddlers, and repay those debts after payday. The desperate resort to debt, even for basic necessities, suggests that workers’ wages are being suppressed amidst the buoyant growth and profitability of Malaysia’s palm oil plantations.

It is important to recognise that implementing a living wage, which is voluntary and usually higher than the minimum wage, will face added challenges. Strengthening institutional capacity by increasing the number and expertise of labour inspectors, providing specialised training, and making it easier for workers to lodge complaints anonymously is essential to fortify the currently weak enforcement of the minimum wage. Supply chain governance mechanisms such as RSPO and MSPO also must be bolder in encouraging their members to pay workers a living wage. The palm oil industry has become one of Malaysia’s most important sectors through its labour.

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