KUCHING: The proposed 13 per cent salary increase for civil servants scheduled for December of this year will undoubtedly impact Malaysia’s economy.
Following this, Sarawak Housing and Real Estate Developers’ Association (SHEDA) advisor Datuk Sim Kiang Chiok said with the civil service comprising approximately 1.7 million individuals out of a total workforce of 16.7 million, the proposed salary hike that will cost the government an additional RM10 billion, will affect roughly 10 per cent of the workforce.
“It is hoped that this raise will be accompanied by an increase in productivity within the civil service. Failing to match the increase in salary with productivity gains may lead to inflation and a reduction in the country’s wealth, as the additional income is spent rather than invested.
“The wage-price inflation is expected to rise in tandem with the wage increase for civil servants.
“The increase in disposable income among civil servants will likely lead to higher prices, affecting both the public and private sectors,” he told New Sarawak Tribune when contacted on Thursday (May 2).
Adding further, Sim, however, pointed out that the private sector may face pressure to raise salaries in order to retain their workforce, as working for the government may become more attractive with the salary increase.
“However, the private sector will benefit from the increased spending power of civil servants, which will stimulate demand for their goods and services,” he said.
Sim also extended his congratulations to the civil servants for this impending raise.
On May 1, Prime Minister Datuk Seri Anwar Ibrahim announced that civil servants will enjoy a salary hike of more than 13 per cent starting December this year, the highest salary increase in the nation’s history.
Anwar, who is also Finance Minister, said that under the Public Service Remuneration System (SSPA) being revised, the government will ensure that the minimum income for civil servants exceeds RM2,000 per month.
