PM Anwar: Malaysian civil servants to see pay hike exceed 13%, costing over US$2B

On Labour Day (1 May), Malaysian Prime Minister Anwar Ibrahim made a significant announcement regarding the remuneration of civil servants.

Anwar, also serving as the finance minister, unveiled plans for a notable increase exceeding 13% in civil servant salaries this year.

The government has earmarked over RM10 billion (approximately US$2.11 billion) for this purpose, ensuring that all civil servants benefit from this adjustment.

He said the increment would be the highest ever given to civil servants.

This increment marks the most substantial raise ever granted to civil servants, surpassing the previous record of 13%, said Anwar.

Anwar emphasized this point during the Labour Day celebrations at the Putrajaya International Convention Centre, affirming that the wage hike will take effect in December.

Furthermore, Anwar highlighted that even the lowest-paid civil servants will experience a significant uplift in their total income, including allowances, with a minimum monthly income rising to RM2,000 (approximately US$422) from the current RM1,795.

 However, Anwar stressed that this increase comes with expectations of diligence and productivity, warning that underperforming employees will not receive the reward.

Encouraging the private sector to emulate the government’s initiative, Anwar emphasized the importance of distributing profits fairly among workers.

“Some companies make a lot of money but where does this huge profit come from? From (the workers’) productivity.

“Give some of it (to the workers). If the company makes hundreds of millions in profit, give a few hundred to the workers,” he said.

In response to Anwar’s announcement, Human Resources Minister Steven Sim Chee Keong endorsed the salary hike, deeming it “appropriate and reasonable.”

Minister Sim asserted that this adjustment is equitable for public servants, particularly since the salary structure for the country’s frontline workers has remained largely unchanged for over a decade.

Acknowledging the diverse reactions to the government’s decision, Minister Sim recognized that in a democratic society, varying opinions and criticisms are inevitable.

“We must also explain why there is a salary increase. After 13 years without a revision by the government, it is appropriate, reasonable and fair to review civil servants’ salaries so that those with agility, wisdom, experience and high efficiency in executing this nation’s plans are rewarded with a salary increase that reflects the service they provide,” he said.

Malaysian Communications Minister: 35% Pay rise in 2007 targeted lowest grade only

Social media users have brought attention to a historical precedent, noting that in 2007, fifth Malaysian Prime Minister Abdullah Ahmad Badawi unveiled a salary raise ranging from 7.5% to 35% for over a million government employees.

In response to these observations, Communications Minister Fahmi Fadzil clarified the context surrounding the 2007 salary increase.

According to Malaysian state media BERNAMA, He explained that the government’s announcement at the time primarily targeted the lowest grade of civil servants, with the 7.5% raise specifically benefiting the highest-ranking officials.

Moreover, Fahmi emphasized that the percentage mentioned by PM Anwar will surpass the 13% increase announced during the last review of the public service remuneration system (SSPA) in 2012.

Concerns arise over timing of public servant pay rise amid economic challenges

However, concerns have been raised regarding the timing of the public servant pay increase amid these challenging economic circumstances, with fears that it might exacerbate inflation in the country.

For instance, Abdul Kadir Jasin, a veteran in Malaysian media, cautiously expressed optimism, extending “the benefit of the doubt” to PM Anwar regarding the overall impact of the civil servant pay raise on the country’s economy.

While acknowledging the joy of those receiving salary hikes, he also voiced apprehensions about the burden on non-government individuals who bear the brunt of public service costs and inflation.

“According to economic theory, when wages rise but productivity does not, costs will increase. When costs rise, inflation also rises.”

“The problem is that the productivity of civil servants is difficult to measure because there is no profit-loss account like in the private sector.”