By Prof Dr Mohd Fo'ad Sakdan

In his announcement during the 2024 Workers’ Day celebration, Prime Minister Datuk Seri Anwar Ibrahim unveiled plans for a substantial salary increase of more than 13 per cent for civil servants, set to take effect on Dec 1 this year.

This increase, facilitated through the introduction of the new Public Service Remuneration System (SSPA), with the stipulation that the total income of salaries and fixed allowances for civil servants must exceed RM2,000, is hailed as the most significant raise in the nation’s history.

In a special interview on the 'Prime Minister's Question and Answer' programme with local television stations, the Prime Minister outlined that the plan aims to create a more equitable distribution of income, balancing the earnings of lower-paid groups with those of higher-paid groups.

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Bold move, profound impact on nation

Given the current economic constraints, a plan that will incur an additional estimated cost of RM10 billion annually to the government is undoubtedly a bold move that will have a profound impact on the nation.

A substantial salary increase can uplift the morale and motivation of civil servants, leading to increased productivity and efficiency in public service delivery. This could translate into better and more efficient service delivery.

In this regard, the reminder from the Director-General of the Public Service Department, Datuk Seri Wan Ahmad Dahlan Abdul Aziz, that all civil servants need to increase their productivity and efficiency alongside the announcement of the salary increase is highly welcomed.

A salary increase that is not accompanied by increased productivity and efficiency will undoubtedly have many negative effects. Therefore, as desired by the Prime Minister, it must be ensured that unproductive and inefficient civil servants do not receive salary increases.

A more competitive salary package can also help retain experienced civil servants and attract new talent to the public sector, thereby injecting fresh perspectives and expertise and enhancing administrative quality.

Reduce corruption, leakages, wastage

Moreover, it could help cut down on corruption, leakages and wastage, which often occur when low-paid civil servants seek illicit ways to make ends meet.

By narrowing the income gap between lower- and higher-grade civil servants, the salary increase will also contribute to greater income equality within the public sector, promoting fairness and social equality.

At the same time, the significant financial commitment required to fund the salary increase poses a significant strain on government finances. Allocating an additional RM10 billion annually can divert resources from other areas.

Injecting money into the economy through salary increases can also lead to inflation. If consumer spending exceeds production capacity, it can lead to rising prices, eroding consumer purchasing power and affecting economic stability.

The question arises: Where will the RM10 billion come from? The government can explore various avenues to finance it, including optimising revenue streams through tax reforms, increased efficiency in tax collection, or introduction of targeted subsidies.

As assured by the Prime Minister, the risk of inflation can be mitigated by closely monitoring aggregate demand and supply dynamics, implementing fiscal policies to stimulate production capacity, and ensuring that monetary policy supports stable prices.

Effective implementation, prudent financial management, and integrated policy interventions are essential to maximise positive impacts and address challenges in terms of financial sustainability and inflation risks, ensuring economic sustainability.

Government commitment to social equity, justice

From a political standpoint, this salary increase is sure to strengthen public perception of the Prime Minister and his government as responsive and caring towards the welfare of civil servants, demonstrating the government’s commitment to social equity and justice.

Although political differences often separate parties along ideological lines, measures that directly benefit the people, such as salary increases, have the potential to garner bipartisan support as measures that improve the welfare of the people are difficult to oppose.

Critics may view the salary increase announcement as a political move to gain voter support in upcoming elections, especially considering the timing of the announcement close to the Kuala Kubu Baharu by-election.

However, this plan has been in the works for some time, and the Prime Minister himself has announced several times that salary increases will be implemented this year. His announcement during the 2024 Workers’ Day celebration is thus reasonable.

Any criticism from the opposition can only be technical in nature, such as that a 15 per cent salary increase is not the highest in history as there was a 35 per cent increase on July 1, 2007.

However, critics should not jump to conclusions too quickly. The 35 per cent increase only involved Support Group II, while Support Group I had a 25 per cent increase, Management and Professional had 15 per cent and Top Management had 7.5 per cent.

We need to wait for further details on this matter when it is presented in the 2025 Budget, but the 15 per cent salary increase is likely to be the minimum percentage increase proposed for certain groups only.

In conclusion, this salary increase is a decision of monumental significance. The government must effectively explain its rationale by emphasising its commitment to bridging income gaps and improving the welfare of civil servants.

In the effort to advance the nation, it is crucial for both the government and the opposition to prioritise the welfare of the people over partisan considerations. If they do not support it, then the opposition parties must provide credible alternatives to it.

-- BERNAMA

Prof Dr Mohd Fo'ad Sakdan is the Vice-Chancellor of Universiti Utara Malaysia (UUM).