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Progressive Salary Policy focus on those earning less than RM5000


30 November 2023

By Wartawan Nabalu News

KUALA LUMPUR: The implementation of the Progressive Salary Policy is expected to have an impact on Gross Domestic Product (GDP), the CE component of GDP, inflation rates, worker productivity, contributions to the Employees Provident Fund (EPF), government revenue, and unemployment rates.


Economy Minister Rafizi Ismail in his proposal for the Progressive Salary Policy in the Dewan Rakyat today said, the expected impacts of implementing the Progressive Salary Policy on the economy and government finances include three impact scenarios that had been prepared using a computable general equilibrium model.


This proposal takes into account the number of workers earning between RM1,500 and RM4,999, which covers 66.6% or a total of four million workers. The set salary threshold will enable more private sector workers to benefit from this initiative.


“The salary threshold for the Progressive Salary Policy will be determined by the Executive Committee for the Implementation of the Progressive Salary Policy. In the first year of implementation, the proposed salary threshold is set for workers earning below RM5,000 and not less than the enforced minimum wage. “


The implementation of this policy is focused on local companies, especially among Micro, Small and Medium Enterprise (MSMEs), as the majority of low-wage workers are employed in MSMEs. Multinational companies are not included in the category of eligible companies for incentives, as these companies are capable of paying competitive wages and attracting and retaining talent compared to MSMEs, he stated.


According to him, government-related companies are also not covered, as the majority of employees in these companies already receive more competitive salaries, and some companies receive allocations from the government.


"Eligible workers to be registered should not receive a monthly salary exceeding the proposed salary threshold set by the Progressive Salary Policy Implementation Committee. In the first year of implementation, the proposed salary threshold is set for workers earning a monthly salary below RM5,000, but not less than the minimum wage.”


Rafizi mentioned that the Progressive Salary Policy is expected to benefit 1.05 million workers with an additional Gross Domestic Product (GDP) value of RM3.3 billion.


"It will contribute an additional RM0.79 billion to the Employees Provident Fund (EPF), an additional RM1.8 billion in income tax revenue with an additional 37,529 new income tax payers in the first year of implementation."

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