KUALA LUMPUR (Aug 4): Economy Minister Rafizi Ramli has expressed confidence that the business community in Malaysia will be receptive to the progressive wage model (PWM) policy papers that will be presented to the National Economic Action Council on Aug 7.
The minister said a ‘middle point’ has been achieved between the government and private sector employers that is a win-win which is expected to greatly address the issue of slow wage growth in Malaysia.
“We have harmonised the various agencies' views on how we can do this. What we will be presenting next Monday is a halfway meeting which can be successfully implemented and practised in this country. It's a middle path that requires commitment from the government and employers. We are hopeful that it will get the support from employers as well,” he said at a press conference after officiating the launch of Statistics on Wages for the first quarter of this year (1Q2023), here, on Friday (Aug 4).
He added that PWM, with its unique solution, will also quell employers' concerns that an increase in salary would result in higher operating cost for business.
The minister further said he has also urged the government to consider setting aside a special allocation intended for wage increase of private sector employees.
“The government has only raised the wages of public sector workers all these while. But the private sector never got anything because there were no progressive policies in place to support wage growth. But this will need government’s approval and yearly allocation,” he said.
Responding to a question on if the PWM will act as a silver bullet to address depressed wage growth in the country in comparison to the minimum wage policy, Rafizi said the minimum wage policy has its limitations.
“The minimum wage behaves differently in different economies. In our economy, it had a series of unintended consequences, and the biggest of all is that it actually dragged down skilled workers' salaries.
“When we set the minimum wage at RM1,500, it became the reference salary even for a skilled worker, whereas this policy was only meant for unskilled workers. This old policy will not solve the problem. In fact, it distorts everyone else’s pay,” he said.
Rafizi said therefore a policy intervention via PWM is important in that it reflects the skill and education level of a worker and will address the weakness of the minimum wage policy.
PWM is jointly developed by the Economy Ministry, Finance Ministry, Investment, Trade and Industry Ministry, and Human Resources Ministry, and would be a transition from the minimum wage model to phased salary increments that would be in line with the growth of the national economy.