90 trade associations object to retrenchment insurance scheme


KUALA LUMPUR: Ninety trade associations today unanimously objected to a proposed new law on the Employment Insurance Scheme (EIS) that seeks to insure employees against job loss.

Earlier this week, Human Resources Minister Datuk Seri Richard Riot Jaem had announced that the Cabinet had last Friday approved for EIS to be tabled in the next Parliament sitting.

Major stakeholders like Malaysian Employers Federation (MEF), Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), Federation of Manufacturers of Malaysia (FMM), Small Medium Enterprises Association of Malaysia (SMEAM), Master Builders Association of Malaysia (MBAM) and Malayan Agricultural Producers Association (MAPA) highlighted that the EIS would raise the cost of doing business and unfairly burden gainfully employed workers.

“The proposed EIS would burden instead of help the majority of gainfully employed workers because the amount to be collected from all employees will be overly disproportionate to intended benefits of the retrenched,” said MEF executive director Datuk Shamsuddin Bardan.

“The EIS is not openly published and the majority of trade associations in the business community were not consulted or regularly engaged,” he said.

“Based on what little was mentioned over the years, the EIS seems to be detrimental to both employers and employees,” he added.

Shamsuddin explained retrenched workers are already receiving Employment Termination and Lay-Off Benefits and retraining via the Human Resources Development Fund (HRDF).

“The EIS is redundant as it seeks to collect money from both employers and employees in excess of potential unpaid retrenchment benefits,” he said.

Shamsuddin was speaking to reporters here today after a meeting with representatives from 90 trade associations in the morning.

Also present at the media conference were ACCCIM secretary general Datuk Low Kian Chuan, FMM vice president Davies Danavaindran, MBAM president Foo Chek Lee, SMEAM president Datuk Michael Kang and Malaysia Plastics Manufacturers Association president Lim Kok Boon.

“Under the EIS, it seems like companies and their workers will be penalised as revenues and salaries will continue to be deducted on a monthly basis even when the economy is experiencing full employment,” said ACCCIM’s Low.

He explained the continued loading of costs such as that of EIS will cause financially weaker companies to fail, which then lead to potential unpaid retrenchment benefits.

“If the government is caring about the fate of its people, it should not burden the business community with mounting cost of doing business and gainfully employed workers subsidising those who are laid off,” Low said.

If the employer-funded RM1.6 billion HRDF is considered inadequate in helping retrenched workers, Shamsuddin noted it would be more beneficial for all workers to contribute to their own savings under the Employees Provident Fund via a third account, rather than as an expenditure to the proposed EIS.

He then reiterated there are always room for improvement for the government to promote business friendly policies that would ensure continued full employment in Malaysia’s economy.