He said it was a strategic decision based on the belief that making it mandatory could be difficult for the economy to absorb, given that 97% of businesses in Malaysia are micro, small and medium-sized enterprises or SMEs.

“I have to admit, at the beginning there was a certain extent of apprehension among employers because they were grappling with the minimum wage. It had pushed up (operating) costs (for them),” he said at a press conference in Parliament.

“They were concerned that another round of mandatory wage increases would remove competitiveness.”

However, Rafizi said the voluntary approach, coupled with government incentives and a commitment to structured upskilling for higher productivity, had so far been well-received by employers.

“The burden for us is to make sure we plan, and that the design, when it is implemented, really has an impact,” he said.

“And to make sure every ringgit the government allocates really improves our labour market, the pay structure and, most importantly, our skill talent in the economy.”

Earlier today, Rafizi tabled a white paper detailing the government’s progressive wage policy slated for implementation next year, targeting workers who earn less than RM5,000 per month.

The white paper came after MPs and economists pointed out the apparent exclusion of the progressive wage policy from the 2024 budget.

Participation in the programme is voluntary, and participating employers will benefit from financial incentives.

Another concern Rafizi had with the progressive wage policy was oversubscription, where too many companies want to participate.

He said the implementation of the progressive salary policy was seen as a solution to various issues, including employees leaving for better opportunities after being invested with training and the significant salary differences between top companies and smaller businesses.