Flourishing growth: A win-win mechanism for implementing the progressive wage model must be adhered to by the government, employers and employees in order to succeed, say business groups. — AZMAN GHANI/The Star
PETALING JAYA: Tripartite cooperation between the government, employers and employees is needed to create a win-win mechanism for implementing the progressive wage model (PWM), say groups.
Compared to the minimum wage, the PWM may be an appropriate and feasible substitute wage model to improve the income of low-skilled workers and provide a living wage, said the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM).
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Its president Tan Sri Low Kian Chuan said the PWM is a win-win model for both employees and employers as it is a wage structure to uplift the low wages of workers through upgrading skills and improving productivity.
With the PWM, wages become tied to an employee’s efforts in upskilling, said Low.
“It also benefits workers by mapping out a clear career pathway for their wages to rise along with training and improvements in productivity and standards.
“At the same time, higher employees’ productivity improves business profits for employers, while customers enjoy better service standards and quality,” he said when contacted recently.
On July 11, the Federal Government’s plan to unveil a progressive wage model could entail making annual salary increments mandatory, Economy Minister Rafizi Ramli hinted as he described the wage model as one of the most “unpopular” reforms he would implement as a policymaker.
Human Resources Minister V. Sivakumar later defended Rafizi, stating that the latter had the right to state his view on what is good for the country, even though wage issues and policies are under the purview of the Human Resources Ministry.
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Sivakumar said the government is studying the fairness of implementing the progressive wage model, with his ministry set to present the issue to the National Economic Action Council (NEAC) next month.
The Malaysian Employers Federation (MEF) had hit out at Rafizi by asking him to devise plans to spur the economy instead of focusing on the PWM.
However, there are valid concerns, grey areas and challenges for the implementation of the PWM, Low said, adding that a thorough study is needed to balance increasing the income of low-skilled workers through the PWM’s productivity-linked performance while ensuring businesses profit due to improving productivity.
He also highlighted some limitations of the PWM, including that it does not deal with the root cause of low-skilled workers, which is that the continuous supply of unskilled labour would result in low labour productivity, which depresses the market wage of low-skilled workers.
He added that the skill-linked component of PWM is also relatively difficult for aged low-skilled workers, hence a tailor-made training programme for more aged workers would be needed.
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Meanwhile, in terms of administration and enforcement, the implementation of the PWM is more bureaucratically complex and costly than the minimum wage, Low said.
It requires a tripartite body comprising the government, employers and employees to design, monitor and enforce the PWM.
He also said that for some low-skilled occupations such as cleaning, security services and landscaping, the productivity is not largely determined by the workers’ skills but more by the investment in equipment and machinery as well as technology.
Low added that the PWM may not be suitable for part-time workers or for a flexi-work schedule.
He also questioned whether the PWM in Malaysia would apply to all businesses across the board, as in the case of the minimum wage.
In Singapore, the PWM covers lower-wage workers in several sectors, including cleaning, security, landscaping, lift and escalator services, and retail.
Low said if implemented in Malaysia, the PWM must also cover foreign workers.
“If not, the employers can avoid paying wage increases by hiring foreign workers not subject to all the PWM requirements.
“The PWM must also be implemented in synchronisation with the quotas and foreign worker levies to manage and regulate the supply of foreign workers,” Low added.
Malaysian Trades Union Congress (MTUC) president Mohd Effendy Abdul Ghani said the PWM can help workers achieve wage increases and career progression by improving their productivity through skills training.
He said the issue with the minimum wage system is that while the National Wage Consultative Council Act 2011 obligates the government to review the minimum wage every two years, the wage has not caught up with the rising cost of living.
“Bank Negara Malaysia in 2018 stated that the living wage for an adult based in Kuala Lumpur was RM2,700, but Malaysia’s minimum wage is only RM1,500 right now,” Mohd Effendy added.
Some employers pay qualified, skilled and experienced workers only the minimum wage instead of a commensurate salary that matches their talents, he said.
“The PWM can avoid discrimination against workers whereby those with higher skills, qualifications and experience can get more wages by increasing their productivity and skill sets,” he added.
“While there are no discussions between the government and workers’ representatives, the MTUC hopes that a tripartite discussion can be held between the government, employers and employees to ensure the best mechanism that can create a win-win situation for all can be implemented,” he said.
He added that while it was time the country moved towards the PWM, the minimum wage of RM1,500 can be used as a floor wage to ensure that employers do not pay workers a lower amount than this.
