PETALING JAYA: More small and medium enterprises (SMEs) should embrace the Progressive Wage Policy (PWP) as a key strategy for boosting wages and productivity, say an economist and a union leader.
They said government support is crucial to help SMEs overcome existing operational hurdles and fully realise the policy’s benefits for economic growth and workers’ welfare.
Tunku Abdul Rahman University of Management and Technology’s Assoc Prof Dr Foo Lee Peng said the PWP objectives are crucial for enhancing workers’ quality of life and fostering a sustainable, resilient economy.
“The PWP benefits both employees and businesses by promoting wage increases tied to productivity, thus enhancing employee satisfaction and retention.
“Government incentives help mitigate immediate wage increase costs, making the policy accessible for smaller businesses,” she said.The training component of the PWP also offers long-term productivity gains for SMEs, potentially boosting revenue and operational efficiency, she added.Acknowledging the concerns of SMEs facing high operational costs and pandemic-induced pressures, she said they need reassurance from the government.
“While SMEs generally support the PWP, they need reassurance that it won’t impose excessive financial strain. There must be a supportive framework,” she added.Government support through financial incentives, training programmes and flexible timelines is essential to bridge the gap between PWP goals and SME challenges, said Assoc Prof Foo, who leads the university’s Centre for Business and Policy Research.
Under the PWP, she said eligible firms can receive monthly incentives of up to RM200 for each entry-level employee and up to RM300 for those in higher positions.
These incentives are contingent upon employees receiving wage increases in line with PWP guidelines and completing approved skills training programmes.
Currently, the PWP applies only to full-time employees in micro, small and medium enterprises (MSMEs) earning less than RM5,000 per month.
Service contract employees may also qualify, provided their contract duration is at least three years.
“The government’s recent announcement to raise the minimum wage to RM1,700 by February 2025, with delayed enforcement for small businesses, underscores its commitment to improving wage standards while accommodating SME challenges. This phased approach supports SMEs in adapting to new wage requirements sustainably,” she added.
Malaysian Council of International Trade Union Network president Datuk Mohamed Shafie BP Mammal (pic) called for space and time for employers to adapt, with a focus on ensuring the PWP benefits both workers and businesses without causing lay-offs.
“The PWP should be elevated as a national agenda, with positive and open-minded approaches,” he said.
Mohamed Shafie also said the government must listen to SMEs’ issues instead of pushing them unilaterally, as many companies are struggling.
“To build a constructive future, we must listen to both sides and avoid emotional responses.
“This policy is still new, and while SMEs want to support the government, they face internal challenges,” he said.
Emphasising a win-win approach, Mohamed Shafie suggested a special task force to address SMEs’ concerns and refine the policy.
“It’s not about rejection, but re-evaluation,” he said in urging for a constructive dialogue.
