KUALA LUMPUR - MALAYSIAN Prime Minister Abdullah Ahmad Badawi announced a slew of perks to boost morale among civil servants amid rising costs and demands for a minimum wage, reports said.

Mr Abdullah said the mandatory retirement age would be raised from 56 to 58 beginning July 1 with pensions for the public sector based on a maximum of 30 years service, instead of 25 at present, beginning next year, the New Straits Times reported on Sunday.

He said the parents of a public servant who dies in service would also receive a lump sum gratuity payment with the next of kin receiving the employee's full pension rather than a pro-rated amount, the paper reported.

The prime minister said the increased retirement age would not reduce the opportunities for younger staff.

'It is important that the new generation of civil servants do not feel that their opportunities for career advancement would be constricted as it is the opposite,' Mr Abdullah told the paper.

Public service union head Omar Osman welcomed the move.

'This is what we have been fighting for,' he told the paper.

'The extension of the retirement age, that pension payment be based on one's actual years of service... are issues that we have been championing for over the last 15 years,' he added.

Mr Abdullah, who in recent months has criticised the public service for the slow delivery of services and the creation of fiefdoms within the administration urged civil servants to have a strong sense of urgency in implementing decisions, the paper reported.

However, the prime minister would not be drawn on the issue of a minimum wage.

The country's top union chief last week called for monthly pay of at least RM1,200 (S$512) to help workers cope with soaring food and fuel prices.

Malaysian Trades Union Congress president Syed Shahir Syed Mohamud and unionists picketed outside parliament to pressure the government to implement the plan but Mr Abdullah has remained non-committal citing fears over inflation.

Malaysia is one of Asia's largest importers of cheap foreign labour and has about 2.3 million workers from Indonesia, Bangladesh, India and elsewhere to clean homes, construct buildings and gather crops. -- AFP