KUALA LUMPUR (Feb 6): The government has yet to finalise the sectors for the first implementation of the progressive wage policy scheduled for June this year, according to Deputy Economy Minister Datuk Hanifah Hajar Taib.

According to her, a pilot study will be conducted in June, during which 1,000 companies from various industries will participate. The pilot project is expected to be completed in September this year.

In this way, the government will be able to test a progressive wage policy, and make the necessary changes for full implementation in the coming years, said Hanifah.

“We are still looking into it. We have to understand that every industry has different challenges. InshaAllah (God willing), it will benefit everyone. It will be a win-win situation,” she told reporters on the sidelines of the Empowering Tomorrow’s Workforce Through Revolutionary Progressive Wage System event hosted by the Malaysian Employers Federation (MEF) on Tuesday.

“I know some are wary of such interventions and promote more libertarian solutions. However, such solutions are not actually mutually exclusive. Progressive wage policy is necessary to jump-start the labour market, but that doesn’t mean we stop our work in transforming Malaysia’s economy. With our identification of five high-growth high-value sectors, we are taking the steps required to move up the value chain and create more frontier jobs,” she added.

Meanwhile, MEF president Datuk Dr Syed Hussain Syed Husman commented: "The devil is in the details of the execution. When you execute, you will find a lot of stumbling blocks, problems and issues. By doing a pilot [project], we will be able to overcome all the issues. Hopefully when we complete the project, we will be able to formulate a proper wage policy that will be applied throughout the country."

The progressive wage policy white paper unveiled by the government in November last year proposed that in the first year of implementation, the wage policy will cover formal-sector workers with monthly income of between RM1,500 and RM4,999, involving at least four million wage earners.

In addition, the white paper proposed to provide wage increment guidance based on cate­gories under the Malaysia Standard Classification of Occupations (Masco), a national benchmark by the Ministry of Human Resources for the classification of occupations in the employment structure of the country.

The progressive wage policy encompasses three essential features, collectively endorsed by the key stakeholders — employees, employers, and the government.

Firstly, it adopts a voluntary approach, allowing approximately 97% of small and medium enterprises, a vital segment of the economy, to circumvent issues of affordability. This voluntary nature prevents potential negative repercussions that could arise if the policy were forced upon them.

Those who decide to opt in, and meet the outlined conditions to be a progressive wage policy employer, will be entitled to cash incentives. This helps boost a company’s cash flow to be able to afford the wage increases necessary to break the negotiation gridlock.

Thirdly, the policy mandates the participating companies to offer skills training in a structured manner to help bolster their employees’ productivity.