Malaysia proposes progressive wage model to bridge salary gap

As part of the proposed model, mandatory salary increments will be introduced annually to address wage inequality.
By: | July 13, 2023

In a move aimed at addressing long-standing structural defects in Malaysia’s economy, the government has announced plans to introduce a progressive wage model which could potentially make annual salary increments mandatory.

Rafizi Ramli, Malaysia’s Minister of Economic Affairs, acknowledged that this reform could be one of the most unpopular measures he has undertaken as a policymaker. He highlighted the possibility of facing backlash, particularly from senior lawyers and other employers who may be reluctant to increase wages.

The progressive wage model was a key election pledge of the ruling Pakatan Harapan (PH) coalition, which is seeking to reshape an economy reliant on cheap labour, putting into focus the pressing issue of wages.

Rafizi emphasised the need for action and revealed that his ministry will present a policy paper outlining the progressive wage model to the government in early August. While specific details are currently unavailable, Rafizi indicated that the policy aims to ensure annual salary increments aligned with a certain level of commitment from the economy.

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One of the main concerns addressed by the proposed model is the suppression of wages by employers, which has led to growing wealth inequality. The current wage situation has not kept up with inflation, raising fears about the widening wealth gap, particularly between the top and bottom earners in the country, reported New Straits Times.