Standing firm: Low (third from right) and Ong (third from left) showing the findings which may lead to potential imbalances, employee dissatisfaction and heightened competition among SMEs when the progressive wage system is implemented. With them are (from left) Dr Grace Lim, Dr Chong Shyue Chuan, Lee Kah Hing and Lee Ban Seng.
KUALA LUMPUR: The progressive wage system proposed by the government cannot ignore concerns about unfairness and its potential to create tension between employers and employees, as well as develop intense competition among SMEs, says MCA.
MCA’s Economic and SME Affairs Committee chairman Datuk Lawrence Low said there are legitimate concerns over the inherent imbalance contained in the Progressive Wage Policy White Paper presented by Economy Minister Rafizi Ramli.
He highlighted that the government’s first come, first served approach to incentives, said to benefit about one million employees, may cause friction between employers and employees.
The potential challenges employers may face in distributing incentives based on employee performance, and the difficulty of maintaining employee satisfaction if there are fluctuations in incentive availability, are possible weaknesses of the proposed wage policy.
Low, who is an MCA vice-president, also warned about the long-term impact on businesses and potential for causing inflation if the government does not continue funding the pilot project beyond the first year.
“Currently, only Singapore has implemented a similar policy, without any other countries as a reference. This one-year pilot project is temporarily supported by government funding.
“However, there are concerns about whether it will increase operational costs for businesses and potentially lead to inflation in the second year and beyond,” he said at a press conference here yesterday.
The progressive wage system is scheduled for a pilot run involving 1,000 companies from June to September.
“Unlike the implementation of minimum wage, which the government took eight years to prepare, as well as the consumption tax (GST), which has been implemented in 160 countries with well-established mechanisms that can serve as references, there is little to go by when it comes to the progressive wage system.
“As a political party supporting the government, MCA has the responsibility to monitor government policies. Through discussions with businesses and employees, we unanimously express our reservations regarding this progressive wage system. We hope that the minister can announce the details as soon as possible,” said Low.
MCA’s Public Policy and People’s Livelihood Research Advisory committee chairman, Dr Monna Ong Siew Siew, pointed out several flaws in the progressive wage system, with the first being the lack of clear selection criteria that may lead to unfair competition and uncertainty for businesses.
Secondly, the policy favours low-skilled jobs, but does not address who should bear the cost of government-mandated training courses.
“This can potentially increase operational costs and contribute to inflation,” said Ong, who emphasised the need for meaningful dialogue between the government and industry stakeholders before implementing the policy.
Thirdly, the new policy suffers from a silo mentality in the government as key ministries related to training and job placement are excluded.
She proposes closer collaboration between the Human Resources Ministry, the Higher Education Ministry and industries, to align courses with market needs and improve the competitiveness of local graduates.
Lastly, a survey of 2,038 workers revealed that only 60% of the respondents support the policy, while the remaining 40% of employees are not in favour, citing reasons such as not having their perspectives, anxieties and concerns addressed.
“The Economy Ministry should conduct more in-depth research, particularly focusing on different age groups, to ensure the policy is aligned with reality and achieves immediate results,” she added.
Rafizi presented the White Paper on the Proposed Progressive Wage Policy in Parliament on Nov 30 to ensure workers receive higher wages in line with increased productivity.
The White Paper proposed that in the first year of implementation, a progressive wage system will involve those earning a monthly salary of between RM1,500 and RM4,999.
