KUALA LUMPUR: An economic multiplier effect can be expected from the rise in civil servants’ wages through the updated Public Service Remuneration System (SSPA), say industry stakeholders across various sectors.
Given the size of the country’s civil service, Federation of Malaysian Manufacturers president Tan Sri Soh Thian Lai said the move can potentially boost the economy.
“Higher salaries could mean an increase in disposable income for civil servants and higher consumer purchasing power, which can stimulate overall economic activity.
“With the civil servants having more money to spend, it could boost consumer demand, leading businesses to increase production to meet this demand. This, in turn, can potentially create more jobs and spur economic growth.
“In addition, the higher spending by civil servants would create a multiplier effect where the increased consumer spending also translates to higher demand for raw materials and services by the suppliers,” he said when contacted.
Soh, who is the immediate past president of the National Chamber of Commerce and Industry, said businesses would generally expect the raise to lead to a more competent, efficient and business-friendly civil service.“Higher salaries can attract and retain skilled personnel, incentivise better performance and reduce inefficiencies.
“Businesses would also look for increased accountability and transparency in government processes, reducing the potential for corruption and bureaucratic red tape,” he added.
Malaysia Retailers Association (MRA) president Datuk Andrew Lim Tatt Keong said he also hoped the civil service would take the increase in wages as an incentive to spur productivity.
“Both the public and private sector should focus on improving productivity.
“The government, too, can assist in helping Malaysian businesses do business more efficiently. With both playing their part, it will be more profitable for everyone,” he said.
Real estate veteran K. Soma Sundram said the property market stands to benefit too, highlighting a potential increase in the demand for properties.
“Malaysians have a high propensity towards investing in properties and having a roof over their heads.
“New property sales will benefit significantly from this new supply of money into the market.
“We can confidently say the property market will get a boost in its performance,” said the corporate strategic advisor for IQI Realty, a leading real estate agency in the nation.
While praising the decision to improve civil servants’ wages, Soma Sundram hoped for improvements in efficiency, productivity and “a high level of service delivery”.“We in the real estate sector hope that consent applications, planning approvals and more can be expedited within the shortest possible time,” he said.
The Malaysian Institute of Estate Agents past president also urged for an operant conditioning mechanism to reward performers.“It is a timely and visionary move to reshape the government service sector which will benefit the whole country,” he said.
Prime Minister Datuk Seri Anwar Ibrahim is expected to make a preliminary announcement on the updated SSPA today.
The full announcement is expected when Budget 2025 is tabled in October, with the updated salaries to be implemented by Dec 1.
Housing and Local Government Minister Nga Kor Ming also said the upcoming salary adjustments are expected to significantly boost Malaysia’s economic growth and benefit small and medium enterprises, particularly in the property and retail sectors.
