Selangor Journal
Image for illustration purposes only. — Picture by BERNAMA

Progressive wage policy aids economy, increases people’s income — Economist

KUALA LUMPUR, Dec 28  — Implementing the progressive wage policy would aid in the development of the economy and increasne people’s income, said an economist.

UniKL Business School economic analyst Associate Professor Dr Aimi Zulhazmi Abdul Rashid said that there is a need for the government to implement the progressive wage policy as the consumer price index (CPI) continues to rise.

“I remember Tok Pa (Datuk Seri Mustapa Mohamed) once saying that the inflation rate might reach 11 per cent from the current forecast of five to six per cent if there were no bulk subsidies/intervention from the government.

“With the minimum wage policy and the progressive wage policy, we have to be sensitive to what is happening. It is not only one side that we want to help in terms of purchasing power but we need to progressively increase the salary itself,” he said on Bernama TV’s Ruang Bicara programme yesterday.

Aimi said if the wage policies are not implemented, it will affect the purchasing power of consumers.

“For example, when I started work 30 years ago, the price of a new car was about RM30,000 but now a new car is close to RM100,000.

“The price of a (Perodua) Myvi is around RM60,000 today The starting salary of a fresh graduate is RM3,000 but in 1993, when I was working, it was RM2,000. You cannot expect salaries to stay the same for the next 30 years.”

Therefore, Aimi said that the government needs to balance the salary increase and, at the same time, not put pressure on businesses, especially on micro, small and medium enterprises (SMEs).

“We have to understand that the position of SMEs is critical in our economy. Why? Not because 90 per cent of the business entities in Malaysia are SMEs but because they are employers to almost 60 per cent of the 16 million workforce in Malaysia.

“So, if SMEs are the ones who are depressed, how can they, who contribute almost 40 per cent to our gross domestic product (GDP),  grow?”

Aimi believes that to implement a policy such as the progressive wage policy, the government should not wait too long to enforce it.

“It is true that some small companies may claim that they cannot raise the price of goods while wanting to cooperate.

“For example, take a small Bumiputra financial firm with around 10 or 20 employees, how can it comply without increasing auditing costs? That is what we need to understand,” he explained.

Hence, Aimi said that the government needs to look at tax reduction and reduction of multiple incentives to advance SMEs so that it can give more wages to its employees and allow them to increase its fees to customers.

— Bernama

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