Progressive wage: Govt looking to extend incentive for employers

The Economy Ministry is considering extending the incentives provided to employers participating in the progressive wage policy pilot project.

Minister Rafizi Ramli explained that the decision to prolong the incentives beyond the initial 12 months will be based on the data gathered during the pilot project, which ran from June to August.

“This pilot project aims to evaluate how the system operates and gather feedback. We want to ensure that the learning curve in our implementation approach is effective,” he said.

He further commented that the pilot project focuses on building a robust system that benefits employers and employees.

“Once we have the data, we will determine the optimal duration for the full implementation. Should it be 24 months? Fifteen months? Twenty months?

“We also need to avoid offering an excessively long period, which could increase the government’s cost. This is why we are carefully assessing the process,” he told the media after a town hall session on the project today.

Satisfactory progress

Rafizi previously noted that participation in the programme is voluntary, but participating employers will receive financial incentives.

Initially, he proposed that employers receive a fixed incentive from the government of up to RM200 per month for entry-level workers and up to RM300 per month for other workers for 12 months.

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With the pilot project in its third month, Rafizi expressed satisfaction with its progress and mentioned that comprehensive implementation will follow after the pilot ends.

“To date, we have about 1,108 companies that expressed interest in participating. I think it is a good progress.

“As we can convince employers that this will benefit them (during the town hall), I hope we will see a higher take-up rate,” he said.

On Jan 10, Rafizi assured that the policy would be implemented thoughtfully, taking into account employers’ capabilities and the country’s economic conditions.

During a parliamentary session in June, Deputy Human Resources Minister Abdul Rahman Mohamad revealed that the policy is expected to be fully implemented in October.

In November 2023, Rafizi announced the government’s adoption of the progressive wage policy, targeting workers earning less than RM5,000 monthly and involving 1,000 companies, particularly in micro, small, and medium enterprises.

Companies enrolling in the programme must send eligible employees to training and upskilling courses, and workers are expected to reflect their increased productivity in their higher pay.

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