by AKMAR ANNUAR
THE progressive wage policy (PWP) pilot project, aimed at reforming the labour market by linking wage increases to productivity gains, has seen substantial engagement.
It has 1,094 registered accounts, 443 submitted applications, and 144 meeting the wage requirements.
However, Economy Minister Rafizi Ramli highlighted the need for a long-term perspective, saying ideally the programme should be extended to 24 months.
“Truthfully, it needs to be extended beyond 12 months for employers to start realising the benefits of higher productivity and better talent from the programme,” he said after the PWP town hall meeting yesterday.
He encouraged employers to see the PWP as more than just an additional salary cost but as a catalyst for upskilling small and medium enterprises (SMEs).
“We hope employers will not perceive the PWP as merely an extra salary expense. It is intended to accelerate the upscaling of SMEs,” he added.
According to the latest data, the median monthly wage in Malaysia is RM2,600, which is below the living wage level of RM3,047.
This gap shows the necessity of the PWP initiative, aiming to increase wages in line with productivity improvements systematically.
The PWP pilot includes 1,000 companies across five sectors: Manufacturing, construction, wholesale and retail trade, information and communication, and professional, scientific and technical activities.
This broad sectoral engagement highlights the programme’s wide applicability and potential for significant impact.
Employers who meet wage and training criteria can benefit from substantial incentives.
Entry-level employees may receive up to RM200 per month, while non-entry-level employees are eligible for up to RM300 per month, provided wage increases meet or exceed the set guidelines.
This incentive structure is designed to promote competitive salary practices and encourage continuous skills development among employees.
To qualify for incentives, participating companies must ensure their employees undergo at least 21 hours of training.
This requirement highlights the programme’s focus on upskilling and productivity enhancement, with training options available through various platforms, including HRD Corp claimable courses, on-the-job training schemes, and e-learning modules.
“The better talent you retain, the longer they stay, the more they can handle complex tasks and create value,” Rafizi said.
He also addressed concerns about inflation that could arise with higher salaries, stating that to offset inflation, companies need to achieve productivity and salary growth that exceeds inflation rates.
“As long as the economy maintains an inflation rate of 2%, that is how many countries in the world grow. We cannot run away from inflation and do not make it an excuse to not raise wages,” he said.
Regarding double tax deductions, Rafizi said many SMEs would not benefit as they only apply to those with statutory income.
Instead, he advocated for providing cashflow support to benefit all SMEs.
“Most employers have cashflow issues. I know that salary is always a nightmare for employers, so it is better to help them by providing cash,” he said.