Malaysia needs a strong and growing middle class group or M40 to catapult the nation into achieving the high-income advanced economy status by 2020, Datuk Seri Najib Tun Razak said.

The prime minister said in any capital market enterprise economy like Malaysia, the middle class is the driver of the economy.

He said the middle 40 per cent of the household income group or M40 is extremely important to the nation’s well-being as this group is central to the nation's consumption spending and private investments.

It also serves as a critical pool for talent, investment and entrepreneurship, he said in a posting on the NajibRazak.com today.

In building up the measures, Najib said plans were afoot to flourish the M40 group in Budget 2016, which was tabled three weeks ago, as well as in Budget 2015.

"No country can reach progressive growth, economically and socially, without the full participation of the middle class.

"The size and strength of the middle class is the quintessential measurement of a country’s economic strength. The middle class’ social and cultural habits and value system can essentially determine the course of a country’s history," he said.

The prime minister said tax relief measures were among the highlights in next-year's budget to alleviate the financial challenges faced by the M40 group, as well as the allocation of RM200 million for the First House Deposit Scheme for home ownership under the Urban Wellbeing, Housing and Local Government Ministry.

On the minimum wage increase, he said it would help increase the income of those who were struggling to break into the middle class bracket, as well as prompt employers to raise wages through “spillover effects” throughout the wage spectrum.

In addressing issues confronting the M40, the private sector also plays an important role in ensuring Malaysians are paid fairly, he added.

"Currently in Malaysia, wages as a percentage to GDP (gross domestic product) stands at 34 per cent in 2014, and this is considerably lower than the level of developed nations, which we aspire to become.

"As such, I call on employers to be more inclusive in the sharing of the economic pie and company success so as to achieve the target of having our employees’ compensation of at least 40 per cent to GDP by the year 2020," he said.

With this, employees can expect a more equitable salary from their companies so long as that they do not compromise on productivity, he said.