PUTRAJAYA: Negotiations with employers and labour unions on the implementation of the Progressive Wage Policy will be led by the Human Resources Ministry, says its minister V. Sivakumar (pic).

In addition to providing guidelines for employers and workers, monitoring, assessment and development coordination would also be carried out, he said.

For system development, the ministry will be involved in the registration, selection and monitoring of companies.

On skills enhancement, it will undertake training verification and quality inspection, supervision, auditing and training coordination.

“The ministry will also provide guidance on annual salary increments through the preparation of proposals for such increases,” he said in a statement yesterday, Bernama reported.

Last Monday, Economy Minister Rafizi Ramli presented the White Paper on the Proposed Progressive Wage Policy in the Dewan Rakyat, which is supposed to ensure workers receive higher wages in line with increased productivity.

It contains three main mechanisms, namely voluntary implementation, incentive-based approaches and government allocation injections, and the responsibility of workers in enhancing productivity.

According to Sivakumar, the collaboration between his ministry and the Economy Ministry in implementing the Progressive Wage Policy will improve the quality of life for low-income workers by providing better wages, ultimately making a significant contribution to Malaysia’s economic development.

The Small and Medium Enterprises Association (Samenta) said input from small and medium enterprises (SMEs) must be obtained before the government proceeds with its plan to implement the progressive wage model trial run next year.

While progressive wages could be a viable option to raise the income of Malaysians, the group said it was “wary” of the initiative.

“Rafizi has correctly pointed out that our SMEs would both benefit the most as well as be affected the most by the introduction of the progressive wage model.

“He has also indicated that the viewpoints of employer groups and trade unions have been sought in drafting the White Paper.

“We would like to urge the minister to quickly bring the conversation to the SMEs, which may or may not be represented by the employer associations, and whose specific needs and challenges may not have been adequately represented in the policy discussion surrounding the progressive wage model,” it said in a statement.

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

Additionally, it said that any improvement in productivity and profitability in any sector might not be reflective of the disparity in productivity gain between larger 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 less than a subsistence wage,” it added.

It said it was a common myth that SMEs did not want to pay more for workers 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.”

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

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 Rafizi’s statement that there will be no further increment in the minimum wage as we trial the progressive wage model,” it said.

https://www.thestar.com.my/news/nation/2023/12/03/hr-ministry-set-to-lead-talks