It’s the government’s responsibility, says MTUC over proposed retrenchment fund

October 26, 20157:55 am613 views
It’s the government’s responsibility, says MTUC over proposed retrenchment fund
A man sleeps at a bus stop in Kuala Lumpur on August 24, 2015. Malaysia's Prime Minister Najib Razak said on August 20 that country's economy was on a sound footing, seeking to assuage growing public and investor fears over the nation's plummeting currency and slowing growth. AFP PHOTO / MANAN VATSYAYANA

The Malaysian Trades Union Congress (MTUC) has raised concern over Putrajaya’s plan to set up an Employment Insurance Scheme (EIS), saying it does not offer sufficient returns or protection for majority of the workforce.

MTUC council member S. Somahsundram said under the scheme, workers could be in a worse situation.

Deputy Human Resources Minister Datuk Seri Ismail Abd Muttalib said last month that the government would announce its decision on the proposed EIS soon.

The scheme was announced last year during Budget 2015, to give temporary financial assistance, reskilling and upskilling for retrenched workers.

Under the scheme, workers and employers are expected to contribute 0.25% each for every RM1,000 per month.

“If the average salary is taken at RM2,000 per month, deductions from 6.5 million eligible contributors amount to RM97.5 million per month and RM1.17 billion a year.

“The irony is that over the past 10 years, the average non-payment of retrenchment benefits is recorded at RM39 million annually. Therefore, why should such a colossal sum be collected?

“In addition, the operating costs to implement EIS is at RM326 million annually,” he said.

Somahsundram said many workers would be worse off than before should the scheme be adopted.

“Why should workers start paying for their own retrenchment?

“In cases where employers abscond or are unable to pay, the responsibility then falls on the tax-collecting government to pay the workers,” he said.

He said another concern was that EIS would enable more “flexibility” and “mobility” for employers to downsize, reorganise or lay off workers without a genuine need for retrenchment.

He added that while the scheme was based on the Korean EIS, the returns were not as good.

“In Korea, the contribution is up to 4.5% and entails retirement, maternity and other benefits.

“Employers in that country are also supportive of the scheme as a large chunk also goes into retraining of workers.

However, the same could not be said for Malaysia.

“MTUC had written to reject EIS on these grounds, however, we are open to discussions if they (Human Resource Ministry) are open to changes.”

Parti Sosialis Malaysia (PSM) deputy chairman M. Saraswathy (pic, left), however, said there was an urgent need to set up a displaced workers fund to counter the effects of the economic downturn.

She suggested the government to incorporate legislative amendments to allow portions from the Social Security Organisation (Socso) to be withdrawn for retrenched workers.

“Amendments have been made previously to allow Socso funds to aid in cases of industrial accidents or children’s education.

“This should be carried out first, immediately. Once this is in place, then we can make way to discuss additional contributions by workers,” she said.

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