KUALA LUMPUR: Malaysia will switch to a new public service compensation scheme from Dec 1 that will see broad pay hikes and salary restructuring for the country’s 1.6 million civil servants, Prime Minister Anwar Ibrahim said on Friday.

The move comes as the government looks to implement fiscal reforms, including fuel subsidy cuts and higher taxes, while increasing financial aid to the needy.

Anwar said civil servants in top management roles will receive a salary hike of 7%, while those in professional and executive roles will see an adjustment of about 15%.

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Income increases for all civil servants will range between 16.8% and 42.7%, and Anwar said the potential impact on prices had been taken into account when deciding on the changes.

The salary adjustments are expected to cost the government more than 10 billion ringgit ($2.25 billion) a year, with further details to be announced in the 2025 budget, he said.

Inflation is expected to trend higher in the second half of the year following diesel subsidy cuts in June, though the central bank said on Friday the impact is likely to remain manageable.