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Rafizi confident many employers will subscribe to progressive wage policy programme

Publish date: Thu, 30 Nov 2023, 06:44 PM

KUALA LUMPUR: Despite being a voluntary initiative, Economy Minister Rafizi Ramli worries of "oversubscription" to the progressive wage policy programme, which opens for registration in April next year.

Speaking after tabling the white paper on the newly-proposed policy, Rafizi said he was confident of the response from employers on the initiative.

"Because this is a voluntary opt-in, there is a risk of oversubscription, where too many companies want to take part.

"In the labour market now, the main issue of employers is finding talents that really match their needs," he said in a press conference today.

He also admitted that there was apprehension about the policy in the beginning, as some were still grappling with the mandatory implementation of minimum wage.

He said they were also concerned that another round of mandatory wage increase would remove their companies' competitiveness.

"We've sat down with them and taken everyone's view. The decision to make this voluntary is not because of any pushback or lobbying, but it is our personal belief that the economy cannot absorb this if we make it mandatory.

"By and large, the employers have supported this. The burden is to make sure the plan and design has impact when it is implemented."

Rafizi also said the ministry would go through a dry run for the first 1,000 companies on a first come-first-serve basis from June to September next year, and iron out any teething or operational problems, tracking, and ensuring that the employers conform to the conditions.

His ministry, he added, had already set aside RM30 million for the programme and it would only be for entry-level graduates and semi-skilled Malaysians, and companies that were currently disadvantaged based on the current labour markets.

When tabling the white paper in Parliament today, Rafizi said almost 56 per cent of workers received wages below Bank Negara Malaysia's recommended living wage of RM3,047 per month.

He said the progressive wage policy mechanism would include three main criteria, including participation requirements, proposed annual wage increments, and incentives based on rates and employee groups.

One of the participation requirements is that eligible employees for registration must receive a monthly wage below RM5,000 and not less than the minimum wage.

"This proposal takes into account the number of employees receiving monthly wages of between RM1,500 and RM4,999, which is about 66.6 per cent or around 4 million workers.

"This wage limit would provide a broad coverage for private sector employees to benefit from this initiative," he added.

Rafizi also said cash incentives would be provided to companies based on rates and employee groups at both entry level and non-entry level stages.

Qualified companies would receive an incentive rate of a maximum RM200 per month for 12 months for entry-level employees, and a maximum RM300 for non-entry level employees, he added.

This is provided that the company paid wages at the same rate or above the suggested annual wage increment guideline.

Rafizi had previously said employers would receive cash incentives after submitting relevant documents as proof of having fulfilled progressive wage policy requirements.

He had said the employers would need to raise workers' wages first and produce evidence before the government can provide them with the incentives.

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