KUALA LUMPUR (Feb 6): There are concerns over voluntary participation of employers in the progressive wage policy, amid uncertainties surrounding the sustainability of the government’s high cash incentives, said Malaysian Employers Federation (MEF) executive director Datuk Shamsuddin Bardan.

Under the progressive wage policy, the government will offer employers up to RM200 as a monthly cash incentive for entry-level workers they hire, and RM300 for the non-entry level, for a period of 12 months.

The policy — which adopts a model similar to Singapore’s — will target formal-sector workers with monthly income of between RM1,500 and RM4,999.

“Our main worry is what will happen after 12 months? Anything beyond the 12 months depends on the financial capacity of the government. It will be very difficult to convince employers to participate in the programme, because after the 12 months, what will happen to the status of the subsidy?

“Can employers that voluntarily implement the policy opt out? There may be situations where the employers cannot sustain their participation.

“So it's better if the government commits earlier to say how long this subsidy will last," he told The Edge on the sidelines of the Empowering Tomorrow’s Workforce Through Revolutionary Progressive Wage System event hosted by the MEF on Tuesday.

The Malaysian government is expected to conduct a pilot project for the initial roll-out of the progressive wage policy in June, involving the participation of 1,000 selected firms. It is understood that the government has not yet finalised which companies or sectors will participate in the pilot project.

In comparison to the neighboring country, Shamsuddin highlighted that Singapore had made an early commitment for five years, from 2022 to 2026, through the Progressive Wage Credit Scheme to support wage increases for lower-wage workers.

“What will happen if our government says that after 12 months, we don't have the money to go with the [progressive wage policy] programme? Are we going to stop it? Or are employers able to take back increases they have given, which is not possible?” he said.

Shamsuddin also touched on the growing challenge of the cost of living outpacing wage growth.

He further urged the government to explore alternative measures to address this issue, aiming to better regulate the cost of living and create a more favourable environment for both the people and businesses.