Lack of awareness and incentives on the progressive wage policy (PWP) are among the main reasons why it remains unattractive to employers, says the Malaysian Employers Federation (MEF).
About 60% of companies involved in the latest survey conducted by MEF on PWP admitted that they have limited awareness of various aspects of the policy. Only 11% of companies considered the incentives offered as being attractive, while 38% responded no, and the remaining 51% were uncertain according to MEF’s latest survey. Only five companies or 2% of the 262 that participated in the survey had applied for the pilot PWP that was held last June to August.
Source: https://www.wikiimpact.com
The recent allocation of RM200mil announced by the Prime Minister would only benefit about 60,000 employees, while the Malaysian workforce comprises about 4.5 million people.
Many business owners will be affected with the new policy, especially with over 90% of businesses in Malaysia being small and medium enterprises. If the business cannot afford it and such a policy is made compulsory, you would see a lot of businesses having to shut down, said the MEF president.
According to the New Industrial Master Plan 2030, SMEs contributed to 38.1% of gross domestic product (GDP), 13.5% to exports and employed 48% of the country’s workforce in 2020, which was below the targets set under the SME Masterplan 2012-2020.
SMEs make up some 97% of business establishments in the country. They are integral to the economy and are major employers, which is why they are crucial to the fixing of the problem.
A total of RM50mil was allocated for the implementation of the PWP pilot project, where participating firms receive a monthly incentive, with a maximum of RM200 per entry-level employee and up to RM300 for those who have been with the company for over a year.
I don’t know if the Human Resources Ministry (or Economy Ministry) worked-out this scheme with stakeholders. On the surface, it looks like they did not. And the PM made a budget point which looked good for a small proportion of workers and not helpful to the employers (and SMEs) or most employees.
Convincing any business to pay higher wages is never an easy task. Many business owners are not against the principle of what the government wants to implement under its Madani Economy framework. The reality on the ground is that not all industries are the same, not all companies are the same and there will always be challenges in implementing the Progressive Wage Policy (PWP), let alone adjusting the minimum wage higher.
Shouldn’t the Government focus on growing the economy and let market forces dictate wages?
References:
MEF: Employers hesitant about PWP implementation, The Star, 28 November 2024
Reform wages now, not later, Fintan Ng, The Star, 9 November 2024
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