Pilot for progressive wage model begins in June with 1,000 companies: Rafizi

KUALA LUMPUR – The pilot roll-out of the progressive wage model will begin next month involving 1,000 companies which will receive incentives for raising workers’ salaries according to set guidelines, according to Economy Minister Rafizi Ramli.

The sectors in the pilot phase are manufacturing, construction, wholesale and retail trade, vehicle and motorcycle repair, information and communication, and professional, scientific and technical activities, he said on X.

The incentives are available for employers who have workers earning between RM1,500 and RM4,999 and who meet other eligibility requirements.

“Selected companies will receive incentives amounting to a maximum of RM200 per month for each entry-level employee and a maximum of RM300 per month for other workers.

“Every employee registered under the progressive wage policy must undergo skills improvement training for at least three days (21 hours),” Rafizi said.

“This is the government’s effort to ensure that the people’s wages are high in line with the increase in productivity in addition to focusing on boosting Malaysia to the status of a high-income country,” he added.

In November last year, Rafizi tabled a paper on the progressive wage model in the Dewan Rakyat.

The plan to reform salary structures in Malaysian companies – as well as to complement the existing minimum wage policy and productivity linked wage system – will see incentives given to companies to encourage their participation, as the model is voluntary.

Rafizi announced previously that the government would kick off the wage reform plan with RM30 million that will cover the incentives to be given to participating employers.

The pilot phase will run from June to September, after which an evaluation will be carried out before the policy is applied comprehensively to all employers in the economy, as part of efforts to deal with Malaysia’s long-standing problem of slow wage growth, Rafizi said.

By targeting workers earning from RM1,500 to RM4,999, about 4 million people or 66% of the workforce will be covered.

Non-Malaysian workers, however, cannot participate in the progressive wage model. – May 23, 2024