TALK about wages, especially of the minimum or progressive kind, employers and economists who argue their case will have bromides aplenty against it.
Unless the government picks up the tab.
These are the very companies and free market economists who want Malaysia to get out of its middle-income trap and into the high-income league.
Only they understand the paradox of high income and low wages.
Take the minimum wage of RM1,500. It is mandatory and yet not all employers are complying.
Little wonder progressive wages are so hard to implement in Malaysia.
The voluntary Progressive Wage Policy (PWP) pilot programme ended in September, with employers hoping it will not be made mandatory.
Even the voluntary PWP piloted between June and September came with a cost to the government.
One media report estimated it to be RM2 billion.
Even with such subsidies, only 1,000 companies opted to join the pilot programme.
If the post-pilot stage of PWP fails to attract most companies, then Malaysia might struggle to get out of the middle-income trap.
Employers could look to Johor, the first state set to implement premium salary packages for skilled workers.
Though targeted at Johor Talent Development Council trainees, the move may set the tone for employers nationwide, especially those who want to attract and retain skilled talent.
One may argue that Johor, just a causeway away, has no choice but to pay salaries on a par with Singapore or it will lose talent to the city state.
Let's not forget, even Kangar is just an hour and 20 minutes away by air from Singapore.
In this digital age, competitive wages travel beyond physical borders. Skilled workers, wherever they are, will seek competitive wages.
The Singapore dollar-Malaysian ringgit exchange rate doesn't favour our employers either.
The city state's minimum wage is the same as in Malaysia — S$1,500 — if the exchange rate is ignored.
Converted, it is RM5,210, an amount too big to discount, even after cost of living adjustment is factored in.
As the saying goes, it would be an offer too good to refuse. Malaysian employers' human resource policies must bear this in mind.
Do not get us wrong. We are not saying employers don't have any reasons to be concerned about the PWP. They do. But productivity of workers, a perennial example that makes it to the media, can't be one of the concerns.
According to the Productivity Report 2024 published by the Malaysia Productivity Corporation, workers' productivity increased by 0.9 per cent last year, though not as high as the previous year's 5.4 per cent.
Be that as it may, the report says the country is on track to reach the target of an annual growth rate of 3.7 per cent, with a productivity level of RM107,170 per employee next year.
Yusof Ishak Institute, a Singapore think tank, points out that wage growth is a laggard here, with wages' share of the national income being a lowly 32.4 per cent in 2022, the year when productivity hit 5.4 per cent.
The government aims to raise this to 45 per cent by 2035.
It will be to the advantage of employers to be on board with Putrajaya.