Wage reform concerns

Businesses wary of minimum, progressive policy

“We can afford to give higher pay, provided we have better productivity and the best talent at work.”

Christina Tee Kim Chin

PETALING JAYA: As Malaysia grapples with economic strains and a complex tax landscape, concerns are mounting within the business community over proposed wage reforms.

National Chamber of Commerce and Industry of Malaysia president Tan Sri Soh Thian Lai expressed concern that implementing both a minimum wage policy and a progressive wage model (PWM) could impose additional burdens on business owners, especially when coupled with the strain of multiple taxes on businesses.

While acknowledging that the PWM is one method to address the perception of low salaries, Soh recognised the challenges of implementing PWM across every industry.

“Bear in mind, including the gig economy, we have over 15 million people in the workforce. In principle, we don’t object to the PWM,” he said yesterday in conjunction with the National Economic Forum (NEF) 2024, themed “Strategic Innovation and Global Alliances: Propelling Malaysia to the Forefront of the Global Economy”.

Soh, who is also the Federation of Malaysian Manufacturers president, instead suggested the government to support small and medium enterprises (SMES) in managing the higher costs associated with this initiative.

Soh emphasised the need for clear longterm policies.

“Currently, due to the weak ringgit, the cost of operations has increased significantly. Therefore, SMES would not be able to sustain it.”

Meanwhile, speaking to Starbiz , the Malaysian International Chamber of Commerce and Industry president Christina Tee Kim Chin advocated for a “willing seller, willing buyer” approach to wages.

Tee, who is also the founder and chief executive officer of Cape EMS Bhd, said that improved productivity and talent quality are essential requirements for higher wages.

“We can afford to give higher pay, provided we have better productivity and the best talent at work,” she said.

With that, Tee believes it’s a win-win situation for both employer and employee.

“Nowadays, it is a job that looks for people and not people looking for a job,” she added.

However, economist Prof Niaz Asadullah, who also serves as the South-east Asia Lead of the Global Labour Organisation, highlighted the critical state of Malaysia’s economy, describing it as being trapped in a cycle of low-pay and low-productivity.

He said this situation is occurring at a pivotal moment when Prime Minister Datuk Seri Anwar Ibrahim aims to transition the nation to a high-income status through mission-oriented economic reforms.

“I say ‘trap’ for the following reason. On the one hand, lack of wage growth over the past decades has coincided with rising cost of living to intensify political demands for an economy-wide pay rise.

“On the other hand, employers are reluctant to increase pay citing poor labour productivity,” he said.

Without intervention, he said market forces alone have not brought about any change to this status quo, prompting the need for policy interventions.

Niaz said while the new government is pushing a re-industrialisation agenda under the New Industrial Master Plan 2030 to transform Malaysia into a global hub, there’s a challenge in balancing skills and technology to create high-paying, high-productivity jobs.

“It is in this context that the government feels that the time is right to shake things up.

“It plans to do so by simultaneously lifting the societal floor (ensure a ‘living wage for all’ via implementing minimum wage policy) in the labour market as well as ensuring average wages growth (through incremental productivity-linked change and increase to wages via upskilling and reskilling initiatives),” he said.

Niaz believes critics, especially from the private sector and SMES, argue that the government’s approach is rushed and ambitious, overlooking critical labour market gaps like poor employability and weak training programmes.