Rafizi: Another mandatory wage hike might break local economy

KUALA LUMPUR, Nov 30 — Economy Minister Rafizi Ramli today said another mandatory increase to the salary levels could overwhelm local businesses.

The Pandan MP said this was because 97 per cent of companies in Malaysia were micro, small and medium enterprises (MSMEs).

“I think when I and the ministry started focusing on labour market reform, I have to admit that in the beginning, there was, to a certain extent, apprehension among employers, because some of them are still grappling with the minimum wage, it has really pushed up the cause.

“They were concerned that another round of mandatory wage increase will remove their competitiveness, but we sat down, we've taken everyone’s view.

“The decision to do this voluntarily opt in, not because of push back or lobbying, it’s our personal belief that at this moment, if we were to make it mandatory, our economy cannot absorb it because 97 per cent of the companies are micro SMEs,” he said in a press conference in the Dewan Rakyat after tabling the Progressive Wage Model white paper.

Rafizi also said Malaysian employers have been receptive to the model to increase local pay levels that have been stagnant.

“I remember initially when we talked about progressive pay policy, there were a lot of people who said they would be opposed by the Malaysian Employers Federation, but they support it. So far, the employer supports it,” he said.

“The burden is for us to make sure what we plan and the design, when implemented, really has an impact and to make sure that for every RM1 the government allocates, it really improves the structure of our labour market, the pay structure, and most importantly, the skill talent in the economy.

“If anything, that is my fear more than what the stakeholders are talking about right now,” he added.

The minister also said he was more concerned about too many companies signing on with the programme rather than not enough, saying that there was already competition and cannibalisation as businesses competed for the right talents.