MEF: Low awareness, strict criteria hamper progressive wage policy

Six months after the Progressive Wage Policy (PWP) was launched, only five of 236 surveyed companies have applied to participate in the pilot programme.

According to Malaysia Employers Federation (MEF) president Syed Hussain Syed Husman, the low uptake is due to limited awareness and a lack of interest in the incentives offered.

The PWP is a voluntary scheme to raise the wages of Malaysian employees through productivity-linked incentives.

A survey by the MEF revealed that around 60 percent of respondent companies were not well-informed about government policies.

Additionally, over half of the respondents expressed uncertainty regarding the attractiveness of the policy’s financial incentives, while only 11 percent found the incentives appealing.

When asked whether the PWP should be made mandatory, the opinions of companies were mixed.

“39 percent said it should remain voluntary, while 11 percent supported making it mandatory. The remaining 50 percent were undecided about whether the policy should be implemented across all companies,” Syed Hussain said.

READ MORE: What’s the progressive wage policy and how much should you be paid?

MEF executive director Shamsuddin Bardan noted that although initial interest in the policy was high, many companies were discouraged upon learning about the stringent participation criteria.

He said that according to officials from the Economy and Human Resources ministries, over 1,000 companies registered their interest in the policy. However, after reviewing the eligibility criteria, this number dropped to fewer than 400.

One of the primary challenges is the wage threshold requirement, which starts at RM1,700, compared to the current minimum wage of RM1,500.

“If companies are not paying their employees at least RM1,700, their applications are automatically rejected,” Shamsuddin said.

READ MORE: KINIGUIDE | The govt's plan to upskill workers and raise wages

Syed Hussain emphasised that as a pilot programme, the PWP represents a learning curve for employers and the government.

“Through this pilot policy, employers will gain insights, and the government will realise that overly strict conditions can deter participation.

“To ensure its success, both sides need to work together. Employers must be willing to come on board, while the government should consider relaxing the criteria,” he concluded.

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