ALOR STAR: Strong government incentives are the key to convincing companies to embrace progressive wage policy (PWP) following lukewarm responses from employers to the pilot project rolled out last year, an economist said.
Associate Professor Dr Irwan Shah Zainal Abidin of Universiti Utara Malaysia said while many are clear about the progressive wage model's (PWM) objective to address income inequality in the private sector, the key issue lies with its implementation.
"One of the ways to improve the worker's productivity is by boosting their purchasing power through improving their wages.
"The issue here is that when companies' income goes up, it is not being distributed fairly between the owner of the capital and the workers. In other words, the extra money goes more towards profit instead of increasing the workers' salary.
"Thus, the PWM addresses this inequality. We are clear on this, but how it will be implemented will be a key issue in 2025," he said.
Irwan added that while companies that were doing well would not likely have an issue with adopting PWM, the challenge would be with companies that were still struggling to stay afloat in this competitive environment.
"There must be strong incentives for companies to voluntarily participate in this programme, and the MSMEs (micro, small and medium enterprises) willingness to join the programme," he said.
He pointed out that the success of the PWP would benefit private sector workers in the form of a better quality of life and standard of living.
"Employers will benefit as their workers' productivity improves, and the government will benefit.
"This will be one of the major catalysts in achieving many KPIs (key performance indicators) of the Madani economy, especially in addressing the high cost of living issue and eventually transforming the economy to become a high-income nation," he said.
Yesterday, Prime Minister Datuk Seri Anwar Ibrahim announced that pushing for better wages from government-linked investment companies (GLIC), government-linked companies (GLC), and companies with massive profits was one of his main focuses for this year.
In his monthly address to the Prime Minister's Department staff in Putrajaya, Anwar, who is also finance minister, said focus would be given to large companies that failed to pay higher wages to their workers, despite making massive profits.
Meanwhile, Consumers Association of Kedah (Cake) president Yusrizal Yusoff lauded the government's move to ensure fairer wages for private sector workers.
"There is a significant disparity between companies' profits and workers' wages, especially among workers in the bottom pay grades.
"Some companies resort to massive cost-cutting measures, resulting in a higher profit for employers, but sadly, workers are not getting progressive wages.
"Hence, we would truly appreciate it if the government could scrutinise companies' operational costs and salary schemes for workers on the bottom pay grade so that they would enjoy higher pay.
"This will certainly help the workers to mitigate higher living costs," he said.
In November, a survey conducted by the Malaysian Employers Federation (MEF) showed that only two per cent, or five, of 236 eligible companies had applied to participate in the PWP pilot project, citing unattractive financial incentives.
In tabling the 2025 Budget in November, Anwar announced that the government would have allocated RM200 million to implement PWP this year, which would benefit 50,000 workers.