High Time Malaysia Implemented Employment Insurance System

By S. Joan Santani KUALA LUMPUR, April 14 (Bernama) -- Workers will be better protected under the proposed Employment Insurance System (EIS), especially in cases where they are retrenched, as they can obtain temporary financial assistance. And to find new employment, retrenched workers would be provided retraining or skills upgrading courses to increase their employability. Malaysian Prime Minister Najib Razak announced that the government had agreed to implement EIS, involving 6.5 million local workers in the private sector. The prime minister had said that a new legislation was being drafted and would be tabled in Parliament in June. It is expected to be implemented on Jan 1, 2018 while payment of benefits would be made by Jan 1, 2019. Employers, in general, have sought the help of the Federation of Malaysian Manufacturers, the Malaysian Employers Federation and the Associated Chinese Chamber of Commerce and Industry, to opposed the move, as such an exercise would incur extra cost to the employers. In defending the rationale for the EIS, Social Security Organisation (SOCSO) Chief Executive Officer Dr Mohammed Azman Aziz said the EIS scheme has already been implemented, many years ago, in China, Thailand, Vietnam and even Mongolia, to name a few. Malaysia needs to look into the implementation of the EIS as the country has been left far behind compared with their peers, he said. In China, Vietnam and Mongolia, employees contributed between 0.5 per cent and 1.0 per cent of their salary towards the scheme while employers contributed between 0.5 per cent and two per cent of the employee's salary. "The reason why I mentioned Mongolia (is because)... I think we are far advanced than Mongolia but they have implemented the EIS. "Within the region, in the 70s, we used to be the champion for social security. Today we are left behind by Thailand and also some of the Indo-China countries. "So it is high time Malaysia looked into this, as the approach is the same," he told a townhall session on the EIS here Thursday. The government, under the Tenth Malaysia Plan, had allocated US$18.15 million (RM80 million) as a relief fund for the loss of employment. Of this amount, about 42 per cent or US$11.8 million (RM52 million) was disbursed to SOCSO in 2011 to kick off EIS. Besides retrenched employees, EIS would also cover those affected by voluntary separation scheme, mutual separation scheme, force majeure (natural disaster), employers' absconding, declared bankrupt, business closure, business restructuring, redundancy as well as automation. However, it would not cover loss of employment due to misconduct, voluntary resignation, retirement, expiry of fixed-term contract. Going forward, he said, if there was a surplus in the EIS fund in the near future, the maternity benefit for private sector female workers would be raised up to 14 weeks (98 days). Others, included wage subsidies to small and medium enterprises of up to 50 per cent for a period of six months, for employers who employed first-time job-seekers, workers above 45 years of age and women after maternity leave. Wage subsidies would also be given by SOCSO to employers who retained workers from being retrenched during economic downturn. On the Employment Termination and Lay-Off Benefits, Mohammed Azman explained that it only covered those who earned US$453.93 (RM2,000) and below. "Hence, EIS is a better option as it covers all employers and all workers regardless of wages and it would be managed solely by SOCSO. Mohammed Azman said Malaysia's unemployment rate stood at 3.5 per cent which translated into 500,000 people. Out of this figure, 40-70 per cent were potential beneficiaries of the EIS. Meanwhile, Mohammed Azman also revealed that last year SOCSO received RM3.17 billion in contributions and paid out about RM2.977 billion to beneficiaries. It's total fund size stood at RM24.67 billion as at end-2016. (US$1 = RM4.41) --BERNAMA