KUALA LUMPUR – The progressive wage model (PWM) will focus its pilot run on industries that are critical to Malaysia’s economic restructuring beginning June next year, with an allocation of RM30 million, Economy Minister Rafizi Ramli said.
He did not name any specific sectors – noting that the pilot programme to incentivise employers to raise wages for employees is voluntary.
“Sectors of focus are aligned with the nation’s needs towards our economic restructuring.
“It also depends on sectors critical to the nation, (which are) those where we need a number of talents,” he told a press conference at Parliament after tabling the White Paper on the PWM in the Dewan Rakyat.
The pilot phase of PWM is to run from June to September 2024 with 1,000 companies and will be voluntary for companies in sectors the government is targeting. These will be companies currently paying worker salaries between RM1,500 and RM5,000.
Rafizi added that companies in these sectors must also have the capacity to increase wages, and be facing a severe talent-to-salary gap.
The selection process will be transparent, he added, going through a cabinet committee that will oversee the PWM pilot phase implementation. Rafizi will chair the cabinet committee together with the human resources minister.
As to the government’s allocation for PWM implementation, Rafizi, who is Pandan MP, said it would not cost more than RM30 million for the first year, which the ministry has already allocated.
The ministry first will evaluate the pilot phase and identify “teething” problems, he added.
“Once we go through the dry run until September 2024, then we’d have a better view of how much savings (we get) from the rationalisation and fiscal consolidation.
“We will decide when the time comes. But, let’s make sure the whole system and processes are in place next year.”
The RM30 million takes into consideration the incentives to be given to the participating companies, as they all have differing numbers of employees, he added.
The companies targeted for initial implementation will be small and medium enterprises (SMEs), where workers earn salaries starting from the minimum wage at RM1,500 up to RM4,999. This will also include entry-level graduates and non-graduates.
The number of workers earning within that salary range is about 4 million people or 66% of the workforce.
Non-Malaysian workers will not be eligible for the PWM, Rafizi added.
The programme is an initiative under the 12th Malaysia Plan to address the long-standing problem of stagnant or slow wage growth in Malaysia, which was 1.8% between 2010 and 2021, lagging behind China’s 7.7%, Thailand’s 3%, Vietnam‘s 2.9% and Indonesia’s 2.6%.
Rafizi said certain employers had initially been apprehensive of the PWM as they were still recovering from the recent minimum wage increase, but sentiments changed when after assurances that it was voluntary and would be linked to employee productivity. – November 30, 2023