THE proposed progressive wage model will help complement the mandatory RM1,500 minimum wage order, said Rafizi Ramli.
He said that a more balanced approach would be to cushion the impact on SMEs while allowing better salaries for entry-level graduates in the job market.
“The Cabinet has approved a policy for a progressive wage model,” he told M. Kulasegeran (PH-Ipoh Barat) in the Dewan Rakyat yesterday.
Earlier this month, in a written reply in Parliament, Human Resources Minister V. Sivakumar said the current two-year minimum wage order was under review in line with the National Wages Consultative Council Act 2011.
The minimum wage order was enacted on May 1, 2022, with a monthly minimum wage of RM1,500 for all sectors, regardless of region, for employers with five or more workers.
Rafizi said 80% of the 1.1 million registered businesses in the country were micro enterprises.
“These are businesses with five or less employees and are mainly in the F&B (food and beverage) sector.
“Another 15% are small businesses, while medium and big businesses make up 2.5% each.
“If we enforce a mandatory minimum wage order without any government intervention, such as incentives, many of these businesses will shutter.
“Also, many workers will switch to the informal sector and become contract workers, making the situation even harder to gauge.
“That is why we are taking the middle road by introducing a policy and model based on incentives provided by the government and related to workers’ skill and productivity,” said Rafizi.
He said a mandatory minimum wage order would force employers to focus more on paying minimum wages at the expense of offering better pay for entry-level graduates.
“The minimum wage is RM1,500 while an entry-level graduate salary is RM1,600 although the employee has the qualification,” he noted.
He said the progressive wage model would be voluntary.
