Progressive wage policy a strategy to boost employee compensation

A PROGRESSIVE Wage Policy white paper is one of the government’s strategies to increase the median wage for workers, thus raising the rate of employee compensation during the remaining period of the 12th Malaysia Plan as well as for the next 10 years.

Economy Minister Rafizi Ramli said the employee compensation rate was at 32% last year due to the Covid-19 pandemic, which caused many to lose their jobs.

“At the same time, Covid-19 also caused salary increases to be not possible as in previous years as the priority of companies and employers was to ensure they themselves had sufficient cash flow for survival.

“The choice at that time was whether to lay off staff or ensure they (employees) were retained but without salary increments,” he said during a question-and-answer session in the Dewan Rakyat today.

Rafizi was replying to a question from Datuk Radzi Jidin (Putrajaya-PN) about the approach the government will use to ensure the target rate of employee compensation, which is 40% of the GDP, will be achieved in 2025.

Rafizi said a total of 17 major (policy) shifts have been identified for the purpose of increasing employee compensation, among them is an emphasis on high-value, high-growth industries such as technology and digital, as well as electricity and electronics.

He also said these initiatives are very important to encourage the shift of economic activities to a higher value chain and to attract more quality investments in knowledge-intensive industries with the aim of creating skilled jobs that offer high income.

Apart from this, the government will begin to introduce a progressive wage policy to reform the wage structure of Malaysian workers and to complement the existing minimum wage policy and the productivity-linked wage system.

“This measure aims to raise the median salary of workers and subsequently increase the employee compensation rate so that workers get better wages to offset their living costs,” added Rafizi. – Bernama, November 30, 2023.