The implementation of progressive wages by employers will be voluntary, says Rafizi Ramli.
The Economy Minister told reporters on Thursday (Nov 30) that the progressive wages programme will help address the problem of lower wages in the country.
Rafizi said that an estimated RM2bil is forecasted for the progressive wages programme when implemented, benefiting 1.05 million workers with an increase in gross domestic product by RM3.3bil.
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The Economy Minister told reporters on Thursday (Nov 30) that the progressive wages programme will help address the problem of lower wages in the country.
Rafizi said that an estimated RM2bil is forecasted for the progressive wages programme when implemented, benefiting 1.05 million workers with an increase in gross domestic product by RM3.3bil.
Read more at https://tinyurl.com/2hsm9jj6
WATCH MORE: https://thestartv.com/c/news
SUBSCRIBE: https://cutt.ly/TheStar
LIKE: https://fb.com/TheStarOnline
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NewsTranscript
00:00 What are the few sectors that will be selected after the 1000th Congress?
00:05 I want to pre-empt because it has to be done in an orderly manner, just to make sure that the whole process goes through transparently.
00:19 That is why we will start with the Cabinet's powers. The Cabinet's powers will guide the implementation and in terms of the sector, company,
00:36 it will go through the process in the Executive Branch, which will be managed by me and the Minister of Human Resources.
00:46 Of course, as we are developing this, we have several concepts and guidelines on how we will choose.
00:56 It depends on several conditions. The consideration must be discussed and finalised at the Cabinet's powers.
01:07 The consideration includes, for example, sectors that are capable of raising wages by participating in this model.
01:19 We have many sectors. If the sector, for example, has a very high wage gap,
01:27 so even if we choose and we put together this Rintesk project for that sector,
01:33 the number of employees that can do it may be too low.
01:39 So the ability factor and also in terms of gap, because the whole idea is to provide a lift-off.
01:50 If the gap is too big, the maximum we will provide is only 200 per month for fresh graduates and entry-level
02:01 and 300 per month for non-entry-level. So first it depends on that.
02:09 Secondly, it also depends on the sectors that are suited to the needs of the country for our economic restructuring.
02:24 We know, for example, that there are sectors that are given a lift-off. So these sectors will be considered.
02:33 It also depends on the critical sectors in the country.
02:38 The sectors that we need a lot of talent for.
02:48 And another example, it depends on whether there is a company or sector,
02:57 in terms of wage gap and skill gap, it is too high.
03:03 If we think that some sectors are so underpaid and that sector has the financial strength with the incentive to push it up,
03:17 we will consider all these factors.
03:20 But it is a bit difficult to decide now because it is a voluntary opt-in.
03:27 So we will decide on the guidance and we will open it to the registration in April.
03:35 From there, I think we will know better. But those are the guiding principles.
03:40 What about the feedback from the employers?
03:47 I am an employer myself. And we have talked to the MFF, to the industry bodies and so on.
03:56 I am confident that employers will agree.
04:02 The issue is more to what Chester asked earlier.
04:05 Because it is a voluntary opt-in and first come first serve,
04:10 one risk that we need to take is over-subscription.
04:16 There are too many companies that want to join it.
04:19 Because in the talent market now,
04:25 the main issue for employers, companies and businesses is to get talent that matches their needs.
04:34 The salary gap between the top companies, MNCs and SMEs or even half of the GLCs is huge.
04:45 So the cannibalisation has been happening.
04:49 Meaning, the SMEs are struggling to get jobs.
04:54 They get a job, they train for a year and they are fired.
04:59 So this attrition is the main problem for our country's economy.
05:06 So with the base of progressive salaries and programs like this,
05:11 from the early feedback, from the management sessions,
05:15 I am not worried about the participation.
05:18 I am worried about over-subscription.
05:21 So it raises the question that Chester asked earlier,
05:24 why them not me? Why the industry not me?
05:29 So that is what we need to ensure, that guidance is made with care.
05:36 I am actually quite positive.
05:39 I think from our discussions, it will be well received by employers.
05:45 I am similar to what Firdaus was asking.
05:48 In the discussions with stakeholders,
05:51 were there any pushbacks and how did you address that concern?
05:54 Additionally, how much do you estimate this will roughly cost the government over the period of 12 months?
05:59 I think when I and the Community and Economy, we started focusing on labour market reform.
06:09 When we talk about labour market reform, obviously it is about pay, it is about upskilling.
06:15 I have to admit that in the beginning, there was to a certain extent apprehension among employers.
06:27 Because some of them are still grappling from minimum wage.
06:33 It has really pushed up the cost.
06:37 So they were concerned that another round of mandatory wage increase will remove their competitiveness.
06:49 But we have sat down with them and we have taken everyone's view.
06:55 And the decision to make this voluntary opt-in,
06:59 this is not because of pushback, this is not because of lobby.
07:03 It is our personal belief that at this moment, if we were to make it mandatory,
07:10 our economy cannot absorb it.
07:13 Because 97% of the companies are micro SMEs.
07:19 So the moment it is a voluntary opt-in, with government incentive,
07:25 and with a commitment and structured upskilling for higher productivity on the part of the employees,
07:33 employers have so far lauded it really well.
07:36 That is why I remember when we first started talking about progressive minimum wage,
07:40 there were many who said that this will be challenged by the MES.
07:46 They actually support it.
07:48 By and large, to this extent, the employers support it.
07:53 The burden is for us to make sure what we plan and the design,
07:58 when it is implemented, it is really having an impact.
08:02 And to make sure that for every one ringgit that government allocates,
08:06 this really improves the structure of our labour market, the pay structure,
08:12 and most importantly, the skilled talent in the economy.
08:18 If anything, that is my fear more than what all the stakeholders are talking right now.
08:25 And in terms of how much you think?
08:27 How much is actually in kertas putih.
08:30 We've put in simulations.
08:34 Sebab itu, the concept is that it really depends on how much government set aside every year.
08:41 So that's why we will go through the dry run first, for the first 1,000 companies,
08:47 because it's not just about allocation.
08:51 It's not even about the concept.
08:54 It's about the teething operational problem once you implement.
08:57 Because you're talking about tracking and making sure those who are in the scheme,
09:03 on the part of the employees, actually went through the upskilling.
09:08 So we have to make sure that all the upskilling and the right trainings are in place,
09:13 and then we also want to make sure that the employers conform to the syarat.
09:22 So I think once we go through that dry run until September 2024,
09:30 and by then I think we will have a much better view about how much savings,
09:37 all the rationalization and fiscal consolidation.
09:42 We would be in a better position to decide how much.
09:46 But the simulation is we've provided the government with a range of simulation.
09:53 If we allocate two billion a year, it will cover 1.05 million.
09:59 And the increase in GDP at what, increase in taxpayers, popo banyak.
10:06 So if you go to three billion, obviously that numbers.
10:09 And then we will decide the allocation when the time comes.
10:14 But let's make sure that the whole system and process are in place next year.
10:19 First is how much is budgeted for the pilot project?
10:23 Second is how do we measure?
10:25 Is it as long as they completed the training program, then they are entitled?
10:30 And then how do we measure the productivity gain?
10:35 In terms of allocation for the Project Ringteks pilot project,
10:42 we have to see when the, how much it costs.
10:47 We have to see when the registration opens
10:52 and when the final selection of that 1,000 companies are done.
10:56 Because different companies actually have different numbers of employees.
11:01 But on the back of the envelope calculation,
11:05 so if you take 1,000 companies and because these are small and medium,
11:11 so on average if you take that one company is 50 employees
11:15 and you are looking at 200 ringgit per month for one year, 2004,
11:20 you do all that maths, for 2024, it will cost about 20 to 30 million.
11:26 And that allocation is already being set aside in the community and economy.
11:32 So it will not cost us more than 30 million allocation.
11:40 That's why I think it's very doable and we want to do that first to see the feedback
11:46 and especially to resolve if there are any teething problems.
11:51 That is the second question about how do we make sure, how does it work exactly.
11:59 There are two components to it.
12:03 First is on the salary.
12:06 So salary, if a company qualifies for it because it meets all the requirements
12:12 and it increases the pay scale for entry level and non-entry level,
12:24 so they will submit claims.
12:27 The jawatankuasa can decide whether it is going to be disbursed back on quarterly basis or monthly basis.
12:34 So they pay and every three months they claim and they will get their reimbursement.
12:39 That helps their cash flow.
12:41 Likewise, for annual increment, after a year, they will submit their payroll and then claim.
12:53 And then the agencies, we have all the agencies working and connected,
12:59 will be able to verify that they did actually pay.
13:03 Annual pay rise, annual increment basically meets the syarat-syarat yang ditetapkan dalam panduan.
13:14 So that's on the part of the employers.
13:17 On the part of the employee, once they are into the program,
13:22 personally they are also accountable for it because for them to get this,
13:27 say you are a fresh graduate, for them to get the RM200
13:32 and because of that your salary goes up by RM200 or RM300, anything above that,
13:37 maximum is RM200 claim.
13:40 They will have to go through certain training that the jawatankuasa will decide
13:46 and will impose for this particular sector at this level.
13:51 We have to see what upskilling that is required
13:54 and that's where Kementrian Ekonomi and KSM really have to see the big picture.
13:58 How do we plan for the upskilling?
14:02 They have to go through that.
14:04 At the end of the year, all the records have to be completed.
14:11 If they do not abide to the upskilling, then they are dropped out from the scheme.
14:22 So they won't, and once you are out of the scheme, as a person,
14:26 obviously your employer says, "Sorry, you are not part of this scheme,"
14:29 and therefore your salary is like that, not like this.
14:32 That's why we have to do the pilot test because if you see the implementation,
14:39 it does require a lot of work to put in all the tracking,
14:44 to make sure that we can validate everything
14:47 and to put in the training and upskilling in place.
14:50 That includes, for example, how exactly do we measure productivity
14:56 because it's not just in the best interest of the company that productivity goes up,
15:03 it's also in the best interest of government to validate and satisfy ourselves
15:08 that this programme with this kind of allocation actually does yield better productivity.
15:17 I think once the numbers are there, all the systems are there,
15:21 it will allow us to decide better from year to year.
15:24 So there's a lot of work to be done in the next six months to put all this in place,
15:29 but I think you roughly get the idea how it will happen.
15:33 Just to confirm, will foreign talents be included?
15:38 No, no, no. It's only Malaysian.
15:40 No foreign talents, no MNCs, no big companies.
15:44 The focus is on those groups that are now most disadvantaged with the current labour market.
15:55 That is usually between RM1,500 to RM5,000 SMEs,
16:02 and they are either entry-level graduates or non-graduates or semi-skilled.
16:07 [Line Break]