KUALA LUMPUR: The 12-month duration for the Progressive Wage Policy pilot project, which starts next month, is too short for companies to adjust to the wage increments and accelerate the intended productivity improvement.
Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai said this may need to be further evaluated during the pilot programme as the attractiveness and comprehensiveness of the incentives are critical factors to support companies that decide to embark and stay on the course of the PWP.
"The government must also look into other tax support for companies after the end of the incentive period.
"While we note that the implementation would focus on SMEs (small- and medium-sized enterprises), we must take into cognisance of the fact that the exempted MNCs (multinational corporations) and GLCs (government-linked companies) would have along their supply chain SMEs who decide to take up the PWP," he told the New Straits Times.
They may have to pass on a certain percentage of their labour cost increases and, in turn, have a ripple cost impact on the operations cost of these exempted industries and the economy as a whole, he said.
He said the government should consider the PWP rollout by sectors and skill categories, especially those that have a higher reliance on skilled workers, instead of an across-the-board implementation, which would have a huge cost impact on all SMEs.
"The wage guide, which is currently pending, is very critical and adjustments may have to be made post the pilot project.
"While it was noted that there will be one general wage guide based on the type of jobs, it must be recognised that in reality the salary ranges may not be the same for each sector."
The location of the sector may also determine the wage level and range, he said.
Wage setting is very diverse across sectors. If the variance is significant, it may have an adverse impact and could derail the implementation, he added.
"While the training period is set at a minimum of 21 hours as a criterion for the payment of the PWP incentive, consideration must be given to whether the company would be able to assess the impact of the training and increase in employees' productivity levels."
Economy Minister Rafizi Ramli earlier said 1,000 employers from five sectors will participate in the pilot project.
They are manufacturing and construction, wholesale and retail trade, repair of motor vehicles and motorcycles, information and communication, as well as professional, scientific and technical activities.