Malaysia’s public sector wage hike sparks private sector wage debate

Malaysia’s recent announcement of a significant public sector wage hike, with increases exceeding 13% for civil servants, has sparked discussions about potential ripple effects in the private sector. However, industry leaders have been downplaying the notion of a forced increase for private organisations.

Syed Hussain Syed Husman, President of the Malaysian Employers Federation (MEF), emphasised that the private sector already conducts regular salary reviews. Many employers adjust wages annually, with increases typically ranging from 5% to 6%, including annual increments.

Additionally, he noted that in unionised organisations, wage adjustments are made every three years. “The triennial salary adjustment is generally about 6-10%, mostly dependent on financial performance,” he said.

Meanwhile, William Ng, President of the Small and Medium Enterprises Association (Samenta), believes the public sector increase serves as a positive benchmark rather than a direct pressure point, reported FMT.

He expressed confidence that private sector wages will naturally rise in the coming years, and said, “The job market in Malaysia is very efficient. When salaries in one sector rise, an automatic increase takes place across all sectors.”

Economists, however, anticipate a more significant impact. Barjoyai Bardai, Professor Emeritus from the Malaysia University of Science and Technology, believes the public sector hike will indirectly pressure private organisations to raise wages. He cited the government’s planned implementation of a progressive wage policy, which would mandate minimum wage increases across various industries.

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He said, “With this announcement, it will indirectly put pressure on the private sector to also do the same. Because if they don’t follow suit, the possibility of losing their skilled employees is also high.”

Political analyst G Manimaran also viewed the increase as a necessary adjustment for the rising cost of living and hoped it would be accompanied by improvements to existing allowances, particularly for those working in major cities.