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In Anwar Ibrahim’s Budget 2024, the highly debated progressive wage model (PWM) found itself conspicuously absent, prompting criticism from economists. Monash University Malaysia economics professor Niaz Asadullah and economist Geoffrey Williams from Malaysia University of Science and Technology expressed their disappointment in the absence of details regarding the progressive wage system in the budget speech. This omission has left many wondering about the implementation and impact of the PWM, which aims to increase workers’ wages by enhancing their skills and productivity.
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Economy minister Rafizi Ramli had previously indicated that comprehensive plans for the progressive wage system would be revealed during the budget speech. While the Cabinet had already approved the PWM earlier in the year, the details of its rollout and its effects on various sectors remained shrouded in mystery.
The progressive wage model is designed to raise wages by improving skills and productivity. Iesa Morshidi, Director of Workforce Management at PwC Malaysia, emphasized that this initiative should not only boost incomes but also promote equitable treatment for all citizens. He stated, “The primary goal is to create greater value within the market in the long run, with a strong focus on upskilling Malaysian workers.” Enabling individuals from the B40 segment to pursue university education would help elevate their earning potential toward the median income level.
For employers to consider increasing wages, there must be a larger pool of productive workers. Initiatives like the New Industrial Master Plan (NIMP) proposed by the unity government are expected to increase the number of skilled and productive workers. The NIMP aims to attract investments of up to RM95 billion, providing 3.3 million job opportunities with intermediate salaries of up to RM4,510 a month by 2030. Anwar officially unveiled the NIMP on September 1, 2023.
Nevertheless, grand initiatives like the NIMP have faced challenges due to structural issues. Niaz pointed out the subpar quality of graduates from both the Sijil Pelajaran Malaysia (SPM) stream and public universities. He noted that the limited quality of graduates poses an obstacle in meeting the demands of today’s job market, emphasizing the need to reduce the availability of low-wage alternatives such as migrant workers.
Niaz also highlighted Malaysia’s struggle with a welfare crisis, exacerbated by the aftermath of the pandemic, which has widened the income gap and resulted in the majority of Malaysian households earning below a sustainable living wage. The absence of the PWM in Anwar’s Budget 2024 has raised questions about the government’s approach to addressing these pressing economic and labor market issues.