Progressive wage system will be voluntary, says Rafizi

PETALING JAYA: According to Rafizi Ramli, the employers’ implementation of progressive wages will now be a voluntary process. This announcement was made by the Economy Minister during the tabling of the White Paper on Progressive Wages in Parliament on Thursday (Nov 30) following discussions with various industries and sectors.

Rafizi stated that the majority of selected industries agreed with the progressive wages policy when it was presented at the National Economic Action Council. He noted that their concerns included the program’s voluntary nature and the provision for companies to assess their financial capacity before registering.

The Minister announced that companies registered under the progressive wages program will receive cash incentives from the government, but post the cash incentive period, employers will be obligated to offer their employees higher wages.

Rafizi further explained that the progressive wages program aims to cover employees earning between RM1,500 and below RM5,000 a month, which would encompass around 66% or four million of the workforce. He stated that the program is focused on enhancing employee skills and increasing productivity.

In addition, it was mentioned that employers can provide a maximum increase in wages ranging between RM200 and RM300. The Minister emphasized that the implementation of the progressive wages program will address the problem of lower wages in the country.

“Based on statistics on formal sector wages for the first quarter of 2023, 73.3% out of 6.54 million workers earn less than RM5,000 a month. Almost 56% receive a reasonable income of about RM3,047 a month, while 47% earn below the Poverty Income Line 2022 of RM2,589 a month,” he stated.

Rafizi projected an estimated RM2 billion for the progressive wages program upon implementation, which is expected to benefit 1.05 million workers and lead to an increase in the gross domestic product by RM3.3 billion. He also mentioned that Employees Provident Fund (EPF) contributions would increase by RM790 million, along with a tax revenue increase of RM1.8 billion from 37,529 new taxpayers per year after the program is implemented.