Employers who raise their employees’ salaries under the progressive wage policy will receive cash incentives from the government. This was announced by the Malaysian economy minister Rafizi Ramli recently.
The Malaysian government approved the progressive wage system policy and the details will be tabled during the upcoming Budget 2024 in October. The system is expected to be implemented in April or May next year.
The progressive wage policy is a new labour market policy that aims to systematically raise workers’ wages and will complement the minimum wage policy.
It entails a wage structure that aims to uplift workers’ low wages by upgrading skills and improving productivity. Employers will be required to raise wages for their employees gradually based on their skills and experience.
The incentive is meant to encourage employers, especially small and medium enterprises (SMEs), to participate in the policy.
According to Rafizi that employers will receive a cash incentive that will be channelled after they submit relevant documents as proof of having met the requirements of the said policy.
The announcement was made during a cabibet meeting at the Dewan Negara’s special session on the 12th Malaysia Plan Mid-term Review.
“It is important to encourage employers to participate in this policy, especially SMEs. Whichever one applies and meets the requirements, will get the incentives. Those who can’t, because the quota has been met because of the provisions that the government has for that year, will have to wait for next year,” Rafizi said.
However, he further said that employers will receive cash incentives after submitting relevant documents to prove that they have fulfilled the requirements of the progressive wage policy.
“Since the allocation is determined by the government, it will not be a financial burden to the government,” he said, adding that the incentives would be implemented on a first-come, first-served basis and the allocations would depend on the government’s fiscal capacity.
He said the policy is also linked to productivity as workers were required to attend government-recognised skills training courses.
“As for now, the government need to plan properly to begin establishing a salary policy framework that will assist the ministry in meeting the target of increasing employees’ compensation share to GDP (gross domestic product) by 45% within 10 years,” Rafizi added.