The proposed White Paper on the Progressive Wages Policy will be one of the government’s strategies to increase the median salary of workers, thereby increasing the rate of compensation of employees (CE) during the remaining period of the 12th Malaysia Plan and the next 10 years.
The Minister of Economy, Rafizi Ramli, said the CE rate was 32% last year following the COVID-19 pandemic, which caused many to lose their jobs.
“COVID-19 also caused salary increases to be impossible as in previous years because companies and employers prioritise ensuring that they have sufficient cash flow to survive.
“The choice at that time was either to fire the workers or to ensure that they continue to work, but their wages do not increase,” he said during a question and answer session at the Dewan Rakyat today.
He answered an additional question from Datuk Dr Radzi Jidin (Putrajaya-PN) regarding the approach the government will use to ensure that the target rate of CE from Gross Domestic Product (GDP) of 40% in 2025 can be achieved.
Rafizi explained that 17 major shifts identified to improve CE, including emphasising high-value, high-growth industries such as technology and digital as well as electricity and electronics.
He said the initiative was important to encourage the shift of economic activities to a higher value chain and attract more quality investment in knowledge-intensive industries to create skilled jobs that offer high incomes.
He said the government will start introducing a progressive wage policy to reform the wage structure of Malaysian workers and complement the existing policy of the minimum wage and the Productivity-Linked Wage System (PLWS).
“This measure aims to increase the intermediate salary of workers and further increase the CE rate so that workers get a better wage to balance their cost of living,” he said.
Answering a question from M Kulasegaran (PH-Ipoh Barat) about the sudden drop in CE, Rafizi said CE dropped sharply by 3% in two years due to the impact of COVID-19, which made the rate stand at 35%.
He said that during COVID-19, many workers lost their jobs, causing them to be out of the employment sector, and that situation caused a reduction in the part of the country’s economy paid as wages.
