KUCHING, May 19 — A mechanism to effectively control inflation must be established to ensure workers can fully benefit from any wage increase, said Sarawak Premier Tan Sri Abang Johari Tun Openg.

He said that any wage increase announced by the government or the private sector is meaningless if that only leads to a sudden increase in the prices of goods and services.

"It is important that if your wage increases, your local consumption can increase. This will stimulate the economy, but the threat is (higher) inflation.

"We don’t want a salary increase while purchasing power remains the same, as this does not give any benefit,” he told reporters after a Malaysia Book of Records programme for the most participants wearing ethnic attire in a choreographed dance performance here today.

Abang Johari was commenting on Economy Minister Rafizi Ramli’s statement that the Federal Government would study carefully the United Nations Children’s Fund (Unicef) proposal to set the minimum wage at RM2,102 a month compared with the current RM1,500.

Rafizi said the Madani government’s policies focus on increasing people’s wages to overcome any rise in the cost of living.

Abang Johari said the Federal Government, especially Bank Negara and the Ministry of Finance, must consider the impact of a percentage wage increase on the flow of money in the market.

"Our economic policy must be balanced, and banks should provide their input as inflation results from too much money (in the market chasing) too few goods. If you raise interest (rates), the flow of money in the market will be reduced and the supply of goods will decrease,” he said.

The Premier said that he had instructed state secretary Datuk Amar Mohamad Abu Bakar Marzuki to conduct a detailed study concerning the wage increase for the state’s civil servants, which the private sector usually follows depending on their financial ability.

"For us in Sarawak, we will conduct a study on wage increase based on productivity. The state government emphasises skill and talent development.

"We create high-skilled jobs based on skill and talent development. If you have the skill, then your pay is higher,” he added. — Bernama