Not right for Economy Minister to make annual salary increment mandatory, says MEF

PETALING JAYA: The mandatory annual salary increment proposal by Economy Minister Rafizi Ramli is shocking, says Malaysian Employers Federation (MEF) president Datuk Dr Syed Hussain Syed Husman.

He said that the MEF is shocked that the Economy Minister is speaking and acting on wages, which should be under the purview of the Human Resources Minister.

"The Economy Minister should be sharing plans to improve the economy with businesses and the rakyat,” said Syed Hussain.

Rafizi has stated that the government plans to unveil a progressive wage model which could entail making annual salary increments mandatory, describing it as one of the most 'unpopular' reforms he would implement as a policymaker.

"The Economy Minister mentioned that his team is studying a proposal to Cabinet. The MEF wonders what this plan is when the industry has not been involved in the detailed discussion of this plan,” said Dr Syed Hussain.

"We have an able Human Resources Minister who understands what the industry needs and has done much to engage businesses, unions, and employees to come up with policies on what is best for the labour market," said Dr Syed Hussain in a statement on Wednesday (July 12).

He said Rafizi should take into consideration that in any economy, market forces determine the right price of labour as industries all over the world have always relied on such data to determine compensation and benefits.

"Malaysia is an open economy and not state owned which is an important factor for the Economy Minister to understand and he should not be making salary increment mandatory under the Progressive Wage Model (PWM),” said Dr Syed Hussain.

He added that the MEF is of the view that before coming up with the PWM, the government has to lay proper and adequate foundation for it to be implemented.

Dr Syed Hussain said for PWM to be implemented successfully it is important to get the buy-in from all the stakeholders and it needs to be premised on clear parameters and terms and conditions for its implementation.

"The payment of higher wages under PMW is linked to performance and productivity and the cost increases associated with payment of higher wages come from the increased revenue and profits from increased productivity and performance," he added.