Pilot run for progressive wage model in Malaysia to start next year

A pilot run for a progressive wage model that will be implemented in Malaysia will begin in June 2024, said Rafizi Ramli, Minister of Economic Affairs of Malaysia.

The pilot will see 1000 organisations with employees earning between RM1,500 (US$322.93) and RM4,999 (US$1,076.21) participating.

“The companies will be chosen with transparency based on the principle of equality, the needs of the sector and policy support,” Rafizi said during Ministers’ Question Time in the Dewan Rakyat (lower house of the bicameral Parliament, the federal legislature of Malaysia) earlier this week. The full effect of the pilot run will be evaluated next September, to ensure the success of the policy before implementation.

The White Paper on the Progressive Wage Model will be tabled in the Dewan Rakyat later this week.

The implementation of the progressive wage policy seeks to address the issue of low pay and reform the salary structure especially in the private sector. The model, Rafizi explained, will include three basic features: voluntary implementation by employers; the government incentivising employers to encourage participation; and wages linked to productivity.

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The Economy Minister was responding to a question by Member of Parliament Hassan Karim, who asked about the timeline of implementation of the progressive wage model.

The White Paper is expected to detail the basic features and mechanism of the policy, reported The Star.