PETALING JAYA: While a progressive wage model could be a viable option to raise income levels in Malaysia, the government should get input from small businesses before implementing the trial run next year, says the Small and Medium Enterprises Association (Samenta).

"Economy Minister Rafizi Ramli has correctly pointed out that SMEs would benefit and also be the most affected by the introduction of the progressive wage model.

"He also indicated that viewpoints of employers' groups and trade unions were sought when drafting the white paper," Samenta said in a statement on Saturday (Dec 2).

It also urged Putrajaya to bring the conversation to SMEs as they were wary of the progressive wage model.

"SMEs may or may not be represented by employer associations. Our specific needs and challenges may not have been adequately represented in the policy discussion surrounding the progressive wage model," it said.

Samenta said the quantum of increment suggested by trade unions and groups representing large employers may not be reflective of SMEs' financial capability.

Additionally, it said any increment of productivity and profitability in any sector may not be reflective of the disparity in productivity gain between large firms and SMEs.

"Samenta is supportive of any effort to raise the income of Malaysians. It is a deplorable state of affairs that more than half of all Malaysians are earning below the subsistence wage.

"It is a common myth that SMEs do not want to pay more for talents with the right skills. In our recent survey in September, two out of three SMEs named talent shortage as their primary challenge.

"As such, no right-thinking SME owner would hold out on paying more to workers if their business margin permits it," it said.

Samenta said a forced wage increment must not be the only solution to reducing income inequality in the country.

Forcing businesses – especially SMEs – to pay more would only be converting the low wage problem into a low margin problem that the SMEs are now encountering, it added.

"As such, we welcome the statement of Rafizi that there will be no further increase in the minimum wage as we trial the progressive wage model," Samenta added.

https://www.thestar.com.my/news/nation/2023/12/02/govt-urged-to-seek-input-from-smes-on-progressive-wage-model