Progressive wage model policy to focus on MSMEs

KUALA LUMPUR: The progressive wage model policy will focus on Malaysian companies, especially micro, small and medium enterprises (MSMEs), says Rafizi Ramli.

The Economy Minister said this is considering 97% of Malaysian companies are in this category.

“These companies are also the ones facing challenges in increasing wages,” he said when tabling the white paper yesterday.

Rafizi said the progressive wage model policy would also focus on Malaysian employees earning less than RM5,000 monthly, noting how 66.6% or 4.8 million Malaysian employees are currently earning less than this amount.

“Instead of opening up participation for this policy to all employees, some of whom are earning RM10,000 to RM15,000, we will focus on those currently earning RM5,000 and below.

“Of course, this will be done in due process and (the wage criteria) will be determined by the Progressive Wage Policy Implementation Committee,” he added.

He explained that a yearly guideline will also be released on the progressive wage model.

“If we want to ensure wage levels are increased in stages, it has to be based on guidelines released by the government.

“This will be done by the Progressive Wage Policy Implementation Committee based on the Malaysia Standard Classification of Occupations,” Rafizi said.

The Economy Minister said employers would also be eligible to receive cash incentives for implementing the policy towards both entry and non-entry level workers.

Rafizi said this is to overcome the issue of entry-level workers having lower salaries each year.

“To be fair, we also need an incentive category for non-entry level workers, such as those with five to 10 years’ working experience,” he said.

“We want to avoid what is seen with the minimum wage implementation, which sees entry-level workers gradually having better salaries while those in more senior positions had slower wage increments,” Rafizi added.

Companies, Rafizi said, could receive cash incentives at a fixed rate of up to RM200 monthly for each entry-level employee under the policy.

Cash incentives at a fixed rate of up to RM300 monthly were for non-entry level workers under the policy.

“This is if employers pay according to the guideline released by the government,” Rafizi said.

Funds for this, he said, would be allocated by the government considering its financial capability.

“For example, if the ceiling wage is RM5,000 and below, and there are 66.6% of employees in this range, it means the government has to spend RM1bil on cash incentives,” he said.

He said the incentives would be paid on a first come first serve basis.

The performance of employers taking part in the progressive wage policy will also be rated to create a competitive atmosphere.