Economists Afzanizam Rashid and Ramon Navaratnam agree that with a fatter pay packet, civil servants will have more to spend, thereby stimulating economic activity.
On the other hand, Federation of Malaysian Manufacturers (FMM) president Soh Thian Lai expressed fears that the private sector may be forced to follow suit, putting a financial strain on small businesses.
Recently, Cuepacs secretary-general Abdul Rahman Nordin said civil servants’ salaries should ideally be revised upwards by up to 35%, just two days after Prime Minister Anwar Ibrahim announced that the government would review it.
Cuepacs president Adnan Mat had, in May, also asked for the minimum wage of civil servants to be raised from RM1,200 a month currently to RM1,800.
The civil servants’ salary scheme was last revised in 2013.
Afzanizam, the chief economist at Bank Muamalat Malaysia Bhd, said raising the salaries of civil servants would be helpful given the rising cost of living.
He told FMT Business an upward adjustment of their salaries would also motivate government employees to be more diligent.
However, he said, the government must also take into account the fact that a significant portion of its budget already goes into salaries and pensions.
“So any move to raise wages must not undermine efforts to reduce the fiscal deficit,” he said.
Ramon, the chairman of the Asia Strategic Leadership Institute, noted that one of the key aspects of Cuepacs’ demand was for a “fair living wage” for the lower-income civil servants.
“It is imperative that lower income groups are afforded a fair living wage, a fundamental right that facilitates the fulfilment of basic needs,” he told FMT Business.
“The path to economic progress should be inclusive. If higher purchasing power is in our sights, it’s essential that the benefits are widespread, helping each and every member of our civil service.
“This collective empowerment, in turn, can lay the groundwork for a stronger and more resilient economy for our nation.”
Ramon, who once served as secretary-general of the transport ministry, also acknowledged that raising civil servants’ salaries would put a strain on the government’s finances.
But, he said, this could be moderated through raising productivity and reducing corruption and wastage.
Soh said Cuepacs’ request was justifiable given the significant rise in the cost of living.
“However, the private sector will see a possible ripple effect on (the cost of doing) business,” he said.
“Employers will be forced to review compensations and benefits for their employees. Given their limited financial resources and current challenging economic climate, small and medium enterprises (SMEs) will feel the greatest impact.”
Nonetheless, he remains confident that any pay increase for civil servants is unlikely to lead to an exodus of workers from the private to the public sector.
“Wages in the private sector are still relatively competitive,” he said.
Soh said the best way forward would be to tie wage increase to an improvement in productivity.
“Higher wages must commensurate with higher productivity and greater efficiency amongst employees,” he said.
The Malaysian Trades Union Congress (MTUC) declined to comment on the matter, saying it was a “sensitive issue”.