Increase salary level, productivity

Photo for illustrative purposes only.

KUALA LUMPUR – The Progressive Wage Policy Proposal White Paper that will be presented in Parliament on Thursday aims to further enhance the nation’s remuneration scheme for workers after enacting the RM1,500 minimum wage last year.

Economy Minister Rafizi Ramli said the White Paper aimed to resolve the issue of the low wage system in Malaysia.

He added that the government realised that wage growth needed to be driven by productivity through efforts to improve skills.

“This has been emphasised by the five HGHV (high growth, high value) sectors that have been identified in the mid-term study, when we want to focus on creating more jobs in the technology field.

“It surprises me that our median salary is only RM11 above the poverty level,” he said during his keynote address at the National Economic Prospects Conference (NEOC) here on Monday.

The issue of low wages not in line with academic qualifications and no consistent annual salary increases continues to plague the private sector workers in this country.

In the 15th General Election, one of the Pakatan Harapan (PH) manifesto was the proposal to establish a Progressive Wage Policy.

Rafizi stated at the time that the salary issue is currently in a crisis and needs to be resolved immediately.

He expressed his concern on Aug 4, about the fact that postgraduate beginning salaries in this country were essentially the same as the RM1,500 monthly minimum wage for unskilled labour.

He added when there was a minimum level involved, the starting salary for postgraduates should be higher but the opposite is happening.

The Employee Wage Statistics Report (Formal Sector) First Quarter 2023 published by the Statistics Department recently revealed that more than two million Malaysians earned less than RM2,000 a month.

In fact, the median monthly wage in March 2023 for the 6.45 million formal workers was RM2,600, only RM11 more than the poverty line income level (PGK) of RM2,589.

Through the implementation of progressive wages expected in April or May next year, the government would issue annual wage increase guidelines for each sector and job category.

Employers would receive cash incentives from the government after submitting relevant documents as evidenced by first raising the employee’s salary.

In the meantime, employees were required to attend government-recognised skills training to increase their potential to receive higher salary offers.

Meanwhile, Economist Professor Emeritus Dr Barjoyai Bardai said the implementation of the Progressive Wage Policy needed to be done in stages according to a certain salary scale because it was expected to have big financial implications for the government.

“Perhaps for the initial stage, we involve the income group of less than RM3,000. So, employees who earn more than that amount (RM3,000) are no longer involved.

“Then (after that) we focus pm the salary group up to RM5,000. The higher income groups may not need to be involved anymore (for starters) because they can still survive even without progressive wages.

“But in the long term it needs to cover all salary groups including those with high incomes,” he told Sinar.

Commenting on the financial implications for the government, Barjoyai said that by taking half of the employers who were unable to meet the new policy involving 16.5 million workers nationwide, it was estimated that the subsidies that needed to be borne would be up to RM28 billion per year.

Universiti Sains Islam Malaysia Senior lecturer specialising in Islamic finance Dr Mohd Faisol Ibrahim said the progressive salary proposal was a good and structured approach to help stimulate the economy towards a high-income country.

“The implementation of this progressive salary can also reduce the country’s poverty rate directly in the long term,” he said.