KUCHING: The Progressive Wage Model (PWM) might be a solution to the issue of income inequality by giving workers more take-home pay.
Universiti Malaysia Sarawak (Unimas) economist Jerome Kueh said the PWM could mean more money in workers’ pockets.
But, he cautioned, it’s not just about giving workers a raise as companies need to see if they can handle the extra cost that comes with paying their workers more.
“If businesses just increase the prices of their products because they are paying their workers more, then we are right back where we started. People might have more money, but everything costs more too,” Kueh said.
He also warned that companies might find it hard to stay open or hire new people if they cannot manage these costs.
But there’s hope. Kueh suggested that businesses can tackle these challenges if they train their workers to be more skilled and efficient.
“Upskilling and reskilling can help a lot. It’s like giving your workers new tools to do their job better,” he added.
“It’s a cycle. You train your employees, they become more productive, your business grows, and in return, you can offer better wages. In a way, it’s not an expense, it’s an investment.”
According to him, some companies might choose to use the PWM because they want to look good and keep their best workers. Such companies understand that when workers are happy and motivated, the business does well.
He stressed the ripple effect that can result from one company taking the lead.
“When a prominent business steps up its wage game, it’s like throwing a stone in a pond. The ripples spread outwards,” Kueh illustrated.
“Other businesses might feel the pressure to match or even surpass that wage standard to remain competitive. This does not just benefit the workers, it improves the entire job market.”
“It’s not just about money, though that’s a big part,” he continued.
“It’s also about pride and motivation. A worker who feels valued and well-compensated is more likely to be loyal, motivated and productive.”
Raising wages has other benefits too. Companies can save money in the long run because they won’t have to keep hiring and training new people.
“It’s expensive to hire someone new and teach them the job. By paying workers well, they are more likely to stay. And experienced workers can do their jobs more effectively,” Kueh observed.
On the flip side, if companies decide not to go with the PWM, their workers might earn less and have fewer chances to move up in their careers.
