Malaysia encourages wage policy compliance with cash incentives

The Progressive Wage Policy aims to enhance workforce productivity through skills training, benefitting both employees and employers.
By: | September 28, 2023

A new initiative to boost employee salaries and promote fair labour practices has been unveiled in Malaysia.

During a special Dewan Negara (Senate) session on the 12th Malaysia Plan Mid-Term Review, Economy Minister Rafizi Ramli laid out the requirements for employers to qualify for cash incentives under the Progressive Wage Policy, highlighting the benefits for both employees and organisations.

The Progressive Wage Policy mandates that employers must first raise employee wages in accordance with the policy’s guidelines before becoming eligible for cash incentives. Rafizi emphasised that tangible proof of compliance is crucial, explaining, “The government will not give incentives just like that (without proof). This cash incentive is important to encourage employers, especially among micro, small and medium enterprises, to participate in this policy. Since the allocation is determined by the government, it will not be a financial burden to the government as (the incentives) will be implemented on a first-come, first-served basis.”

Any employer meeting the policy’s criteria should receive incentives unless the quota for the year is already met. In such cases, employers will need to wait until the following year to qualify.

READ MORE: Minimum wage in Malaysia dictated by progressive wage system

The Progressive Wage Policy is linked to productivity, requiring employees to attend government-recognised skills training. Rafizi elaborated, “Employees then would be able to enhance their talent and marketability as well as increase productivity at work. This will balance the need for better wages while being fair to employers who can also benefit from better productivity.”

However, the allocation of resources to implement the policy will be contingent on the government’s fiscal capacity, he added, reported New Straits Times