Progressive Salary Policy Being Discussed By The Government

progressive salary policy for Malaysian workers

After the National Economic Action Council (MTEN) meeting yesterday, the Prime Minister Datuk Seri Anwar Ibrahim has announced that the government will introduce a progressive wage policy.

In a statement released yesterday, the Prime minister said that the introduction of the policy is one of the government’s initiatives to improve the labour market, so that workers will get fair recompense for their work.

Aim to increase salary share ratio to 45 percent

“At the same time, following the percentage of Malaysian workers’ income (wage share ratio) has decreased from 37.2 per cent in 2020 to 32.4 per cent in 2022, the government has set a target for this ratio to increase to 45 per cent of the total income,” he said after chairing National Economic Action Council (MTEN) meeting yesterday.

In the statement, Datuk Seri Anwar Ibrahim also announced that the progressive wage policy will be ‘voluntary, incentive-based, and productivity-linked.’

“The policy model was proposed after MTEN took into consideration the views and interests of employers and workers.

“This policy, which complements the minimum wage policy, would be followed by guidelines for the annual progressive wage for each sector, job and level,” he said.

The Prime Minister also revealed that the preliminary engagement sessions shows that both employees and companies are receptive to the policy, with 62 percent of employees and 80 percent of companies giving positive feedback.

The next step will be further discussions and engagement sessions will be held with stakeholders, industry players, businesses and employees.

The proposed Progressive Salary Policy will  also be brought to the Cabinet for fine-tuning, and also to study the need to provide funds as incentives for its gradual implementation.

Datuk Seri Anwar Ibrahim also said in the statement that the Madani Economy: Empowering People framework determines the country’s direction in the medium-term, especially in placing Malaysia as an economic driver in Asia and among the 30 largest economies in the world.

Just last week, Economy Minister Rafizi Ramli revealed to the media after launching the Employee Wage Statistics formal sector report that the majority of Malaysian workers were paid low wages.

Progressive salary policy to be fine-tuned

In the report, the numbers showed that 82 percent of the 6.45 million formal workers were paid less than RM5,000 a month and and from the 82 percent, 35 percent were paid RM2,000 and below in March 2023.

This clearly shows the need for the progressive wage policy, an opinion that the Prime Minister shares.

“The wage issue is a main concern that can no longer be neglected.”

The data clearly shows that for most Malaysian employees, their salary would only reach RM3,500 when they are aged between 40 and 49 which is also the highest they can earn throughout their career, the prime minister had highlighted.

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