Malaysia is mooting a progressive wage model (PWM) to boost salaries. We look at what needs to be done so that it can benefit both workers and employers.
- AZHAR MAHFOF/The Star.
Syed Hussain said a PWM must prioritise productivity growth over salary hikes to ensure that Malaysia remains competitive. According to the Statistics Department’s Quarterly Employees Wages Statistics Report, 75.7% of the 6.45 million formal employees in Malaysia earned less than RM5,000, with more than a quarter or 34.8% receiving less than RM2,000.
Although Kuala Lumpur, Selangor and Putrajaya had the largest median salary compared with other states, they were among those that recorded the smallest or negative salary hike in March 2023, compared with a year ago. “In such a situation, higher wages will eventually result in employers passing on the increase in cost to consumers.ALSO READ > INTERACTIVE: Salaries in Malaysia are healing from pandemic, but at different rates
“Stakeholders should be consulted and a tripartite committees made up of unions, employers and the government needs to be formed to formulate and implement the PWM for certain selected sectors as it will shape the future of the economy,” he said. Malaysia University of Science and Technology economics professor Geoffrey Williams said that the best way to increase wages is to reform the labour market to help employees get better terms and conditions of employment and to enforce employment law more effectively.“The reason the government intervenes with a PWM or minimum wage is because the labour market does not work properly.
He said the implementation must include helping employers understand how to adopt a PWM with guidelines.
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