Educational transformation crucial for success of progressive wage policy

KUALA LUMPUR: Economic experts said prioritising educational transformation is crucial to ensure the prolonged success of the government's proposed progressive wages policy.

Universiti Teknologi Mara (UiTM)'s Arshad Ayub Graduate Business School, Prof Dr Tan Pek Leong and Assoc Prof Dr Mohamad Nizam Jaafar assert that the progressive wage policy is not a long-term solution; rather, it serves as a catalyst to improve salaries for individuals earning below RM5,000 per month.

They argue that this underscores the need to enhance the overall quality of the Malaysian workforce before full implementation to ensure efficiency.

"To secure the lasting success of this initiative, it is imperative to elevate the caliber of our workforce. Our goal is to produce high-quality workers—graduates who are not only abundant but also sought after for their excellence.

"Singapore effectively addressed low salaries with a progressive wage scheme, built on a workforce recognised for its high quality.

"Our focus should be on nurturing graduates of exceptional quality rather than mere quantity. This lays the groundwork for a sustainable, long-term solution," they said in a joint statement today.

The White Paper on progressive wages, set to launch next year, primarily targets individuals earning below RM5000, offering incentives to participating companies through a cash subsidy system.

Participating companies are enticed with incentives through a cash subsidy system, providing entry-level staff with a monthly RM200 subsidy and experienced staff with a monthly RM300 benefit, both extended over a 12-month period.

Although the initiative has received widespread acclaim, concerns regarding its long-term sustainability have emerged, notably voiced by the Economy minister, who acknowledges it as a short-term solution.

Economists warn that failure to align progressive education with the progressive wage initiative raises uncertainty about its sustainability.

"Neglecting the transformation of the workforce into genuinely skilled individuals not only jeopardises the scheme's long-term success but also poses risks such as increased inflation, threatening overall economic progress.

"The absence of progressive education may cause the progressive wage to inadvertently harm the economy instead of fostering sustained growth," they said.

While salary subsidies are crucial, they also argued on the need for workers to engage in training programs to boost productivity.

They also highlighted the necessity of a comprehensive approach to progressive education for sustained higher salaries, relying on the availability of skilled and productive workers in alignment with economic principles.

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