KUALA LUMPUR: The government has not decided on which sectors will be part of the pilot project for the roll-out of the progressive wage policy, said deputy minister of economy Datuk Hanifah Hajar Taib.
"We are still looking into it and seeing if its a one size fits all. We need to have a thorough understanding of the unique challenges and advantages within each industry. I hope we can address them effectively for the benefit of everyone involved," she told reporters at the sidelines of Malaysian Employers Federation Progressive Wage System (PWS) Conference today.
The government plans to have some 1,000 companies involved in a pilot project to test out the progressive wage policy in July 2024.
The pilot project will run for a year and involves those earning a monthly salary of between RM1,500 and RM4,999, covering some four million workers in formal sectors, and limited only to Malaysian citizens.
"In doing so, we will be able to test the progressive wage policy and make the necessary amendments for full implementation in the coming years," she said.
Hanifah said in her keynote address that almost half of the workers in Malaysia's formal sector receive a wage lower than the National Poverty Line.
"56 per cent are earning below the living wage. We have fresh graduates who have had their median salary decrease from RM2,066 in 2019 to RM1,624 in 2022," she said in the keynote address.
Hanifah added that if these trends continue to worsen, Malaysia will be facing an era of discontent.
The initial effects which Malaysians are already experiencing: are a brain drain dilemma, a disgruntled younger generation, and the search for populist solutions as quick fixes.
Hanifah said to combat the detrimental effects of the cost of living, a low-hanging fruit for most governments is to artificially subsidise prices so people can continue to get by.
However, this remains a short-term solution, that only strains the fiscal space government can work in, and fails to see the other side of the coin.
She said instead of looking at lowering the price, increasing the wages ought to be part of any meaningful, long-term strategy that looks to reform our unique labour market.
Malaysian Employers Federation president Dr Syed Hussain Syed Husman said the devil is in the details of the execution of the progressive wage policy.
"When you execute, you will find a lot of stumbling blocks, problems and issues. By doing a pilot project, we will be able to overcome all the issues. "Hopefully when we complete the project, we will be able to formulate a proper wage policy that will be applied throughout the country," he added.
Micro, small and medium enterprise (MSMEs) comprise more than 97.4 per cent or 1,173,601 of all registered businesses in the national economy with a recorded growth of 11.6 per cent percent in 2022 surpassing the national gross domestic product growth of 8.7 per cent in the same year.
Syed Hussain said using this demographic description of businesses, it is fair to say that an increase in wages would impact the whole operation of MSMEs.
"This then brings us to the critical issue of affordability, which means that if we leave the proposed new wage structure to the MSMEs, the likelihood is that we might not be getting the desired effects," he added.