Progressive wage system elevates employee's productivity - Sivakumar

KUALA LUMPUR - The progressive wage system will increase employee productivity in line with the knowledge and skills possessed if implemented by all private employers.

Human Resources Minister V Sivakumar said that although the system is not mandatory, it is important to retain existing employees to continue benefiting employers.

According to him, the problem that arises is the minimum wage of RM1,500, which doesn't justify the experience and knowledge possessed by employees, thus reducing the productivity rate.

"The minimum wage we have now is RM1,500, but some employees have gone to study a technical and vocational training programme (TVET) for two to three years, yet the salary they get is the same as school leavers who have just completed their Malaysian Education Certificate (SPM), which is RM1,500.

"Most employers now think that paying the minimum wage alone is enough. This is an injustice to those who have experience, skills, and knowledge. If we wanted to raise the minimum wage, it would not be fair to all employers, so there needs to be a balance.

"Employers want productivity among employees to increase, so this progressive wage system can help both parties, either employees or employers. If you want productivity to increase, give better wages," he said.

He said this after the launching of the Semarak Merdeka: 66th National Day Celebration organised by the Human Resource Development Corporation (HRD Corp) at Menara HRD Corp here on Monday.

He added that the time has come for employers to pay wages that are on par with the skills and knowledge possessed by employees, in line with the government's efforts to increase economic growth.

Previously, Sivakumar said that the RM1,500 minimum wage is still maintained under the policy framework of the progressive wage system.

He said that the progressive wage system, which is seen as the most relevant to be practiced in Malaysia, needs to go hand in hand with the minimum wage and increase employee productivity, thus benefiting employers.

Last Thursday, Economy Minister Rafizi Ramli said that the progressive wage system policy had been approved by the cabinet, and the details will be presented in Budget 2024 this October, with the expected implementation in April or May next year.

The progressive wage system is a transition from a minimum wage model to a gradual and phased wage increase so that it matches the country's economic growth.