9-12-2023 (KUALA LUMPUR) In 2018, when Ahmad Zulkarnain graduated from a local university with high hopes, he envisioned a brighter future. Fast forward to the present, the 31-year-old finds himself in a small engineering firm in the Klang Valley, earning a monthly salary of RM3,500 (US$750). Despite being single, Ahmad struggles to make ends meet, with a meager amount left after paying rent, car installments, student loans, and daily expenses.
The rising cost of living, exacerbated by inflation, has taken a toll on Ahmad. He’s not alone; many Malaysians face similar challenges. However, Ahmad’s interest was piqued when Malaysia’s Economy Minister, Rafizi Ramli, announced on November 30 the government’s plan to implement a progressive wage policy.
This policy, inspired by Singapore’s model, aims to be voluntary, incentive-based, and productivity-linked. It targets low-income workers, particularly those earning less than RM5,000 a month. The voluntary program, set to launch in June, will start as a pilot project focusing on micro, small, and medium enterprises (SMEs).
According to Rafizi, the program will include cash incentives of up to RM200 monthly for fresh graduates and entry-level positions and up to RM300 monthly for non-entry-level posts, lasting for 12 months. Incentives will be aligned with productivity increases and reviewed annually based on the government’s fiscal position.
While Ahmad hopes for a positive impact on his wages, skepticism surrounds the policy’s implementation. Employers express concerns about potential impacts on their businesses and long-term viability. Workers’ groups fear it might turn into another wage subsidy scheme.
Economist Lee Heng Guie sees it as a win-win model, emphasizing the commitment to self-development for employees and higher productivity offsetting increased costs for employers. However, concerns from employers, such as sustainability and the one-year subsidy duration, linger.
Dr. Syed Hussain Syed Husman, president of the Malaysian Employers Federation (MEF), appreciates the pilot project’s idea but emphasizes the need for long-term sustainability. Employers may hesitate due to uncertainties about ongoing subsidies.
Chin Chee Siong, secretary-general of the SME Association of Malaysia, supports the policy but questions its viability. SMEs, facing immediate business concerns, may be reluctant initially.
Incentives and potential financial implications, coupled with uncertainties about the process, lead to reservations. Employers and experts call for continuous government support to induce behavioral changes and avoid overdependence on subsidies.
While many businesses are unaware of the policy, some, like Chocofac Malaysia, express interest. James Anthonysamy sees government assistance as a welcome boost to employee wages, but details on productivity measurement remain unclear.
The policy has also raised concerns among workers’ unions, such as the Malaysian Trade Union Congress (MTUC). Kamarul Bahrin Mansor criticizes the lack of worker representation in discussions. Questions about productivity measurements in certain sectors add complexity.
NUBE’s J. Solomon doubts the policy’s link to productivity, highlighting Malaysia’s detached wage structure from productivity. PSM’s S. Arutchelvan fears the policy could compromise the minimum wage. Rafizi assures that the minimum wage will stay and be strengthened.
As the government strives to uplift low-income workers through the progressive wage policy, the challenges and uncertainties surrounding its implementation reveal the complex dynamics between businesses, workers, and the need for sustained government support.
