What Would a Progressive Wage System Look Like?

Minister of Economy, Rafizi Ramli recently said that the government is looking in principle at the policy for a progressive wage system in Malaysia and the discussion and engagement process has begun with various stakeholders. The minister said this is in line with the 12th Malaysia Plan’s aim for the compensation of employees as a percentage of GDP to hit 40%, which is an increase of roughly 3-6%. In simple terms – a larger share of the pie of companies’ revenue will go to its workers. For perspective, the compensation of employees as a percentage of GDP is about 50% in Australia and South Korea and slightly over 40% in Singapore. This highlights just how low and unfair wages are in Malaysia.

A progressive wage scale model refers to a system or framework where wages or salaries increase progressively based on various factors such as skill level, experience, job performance, or seniority. The model is designed to ensure that individuals are rewarded fairly for their contributions and that wage growth aligns with career advancement or increased expertise. Many countries have some form of progressive wage model, including Singapore. We discuss what a progressive wage scale would look like in reality in Malaysia, with Terence Ho, Associate Professor in Practice, Lee Kuan Yew School of Public Policy, National University of Singapore, as well as Kevin Zhang, Senior Researcher, ISEAS-Yusok Ishak Institute.

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