As Malaysia’s federal government prepares to roll out a progressive wage model, Economy Minister Rafizi Ramli’s recent speech on July 11, 2023, at the International Malaysia Law Conference in Kuala Lumpur caught everyone’s attention. It was here Rafizi stirred up the audience with his candid revelations about possibly making annual salary hikes a required element of this new wage policy.
Previously, the ruling Pakatan Harapan (PH) coalition made a promise – albeit one fraught with challenges – during their election campaign. The pledge was to overhaul the country’s economy, heavily reliant on inexpensive labour, through broad yet intense reforms. Key among these reforms was the issue of wage increment.
In charge of this gargantuan task, Rafizi warned of possible opposition from employers. As he pointed out, compelling salary hikes could attract resentment. However, confronting this ‘elephant in the room’ is essential to address the increasing cost of living – a concern that the Anwar administration has underlined as well.
Rafizi revealed the plans to release a policy paper, outlining the progressive wage model, by August. He admitted this move may not be well received, particularly by top-tier professionals like senior lawyers, as it means a consistent annual wage increment.
However, the minister also clarified that a progressive wage policy isn’t just about annual increments. It also enforces a degree of adjustment between the salaries of the highest-ranking and lowest-ranking partners.
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Currently, the proposed wage model specifics remain under wraps, but Rafizi’s ministry has pointed to it as a crucial step towards fixing longstanding structural flaws in the economy. These flaws have allowed wage suppression to persist, leaving salaries lagging behind inflation rates.
This wage suppression is a significant contributing factor to the growing fear of increasing wealth inequality, particularly between Malaysia’s highest and lowest earners.
Furthermore, Malaysia’s economy is under strain due to stiff competition from neighbouring countries also leveraging cheap labour. According to economists, this has played a role in stifling Malaysia’s wage growth.
However, it seems a change is on the horizon. While controversial, this new wage policy could be the reform Malaysia needs to level the economic playing field and ensure equitable growth.
Source: Malay Mail.
