KUCHING: The acceleration of a fair wage system for public officials, which was postponed last year owing to financial restrictions and significant inherited debt, was recently announced by Prime Minister Datuk Seri Anwar Ibrahim.
“The national debt and deficit were reduced to about 5 per cent through the combined efforts of leaders, the Cabinet, the chief secretary, agencies, and the private sector.
“We could not do it last year because we inherited a (bad) financial situation with a national debt that was still at RM1.5tril.” he said this in his speech during the Central Database Hub (Padu) unveiling.
Before the year closes, Anwar will also reveal the new compensation plan; guidelines are anticipated in the first quarter of 2024 (1Q24).
Dr Dzul Hadzwan Husaini, Senior Lecturer, Faculty of Economics and Business, Universiti Malaysia Sarawak stated that these considerations should also have been taken into account for civil servants before the Covid-19 pandemic struck.
“Optimistically, this shift promises to enhance people’s purchasing power, fostering GDP growth and generating positive ripple effects for key sectors like corporations, SMEs, and households.
“Moreover, the resulting higher GDP is anticipated to boost government tax revenue, facilitating increased investments in crucial areas such as healthcare, education, infrastructure, and other social sectors.
“Consequently, this holistic improvement is poised to elevate the overall standard of living for Malaysians.” he said on Wednesday (Jan3).
“Certainly, a salary increase would escalate the operating costs for the federal government, posing a challenge to its commitment to improving the national debt ratio.
“Nevertheless, wage revision is imperative, given the prolonged absence of adjustments. The current remuneration is incongruent with existing commitments and the evolving economic landscape,” he added.
He commented, to sustain this commitment, the government should consider overhauling the current tax system to generate additional revenue.
While a more productive and effective tax system might adversely affect certain vulnerable groups, the government can mitigate this impact through offset policies, such as targeted cash aid and subsidies, ensuring a balanced approach.
A positive aspect of the current government is that salary revisions extend beyond the public sector to include the private sector through the introduction of a progressive wage policy.
It emphasises the need for all stakeholders to contribute to ensuring fair and equitable salaries, aligning with the national interest to enhance the standard of living for everyone.
“Merely relying on the government for salary increases may lead to private sector price hikes, diminishing the impact of government initiatives. Hence, introducing a progressive wage policy alongside public sector salary adjustments is a timely and effective approach,”he stressed.
“Initially, the commitment to government debt service is diminished, freeing up funds for alternative high-quality expenditures. Subsequently, the value of taxes paid by citizens increases, as a significant portion is no longer allocated to debt payments. Lastly, newly incurred debt is directed exclusively towards financing high-quality investments,” Dzul Hadzwan added.
