FMM raises concern over disparity between funds to be collected under EIS and expected payout

TheEdge Wed, Mar 29, 2017 06:53pm - 7 years View Original


KUALA LUMPUR (March 29): The Federation of Malaysian Manufacturers (FMM) is strongly opposing the Federal government's move to implement the Employment Insurance Scheme (EIS), and questioned the management of the funds that will be collected under the scheme.

The EIS, which aims to provide temporary financial aid for retrenched workers, will require contribution from both employers and employees at a rate of 0.25% each.

According to FMM's projection, the scheme is expected to cost employers some RM1.2 billion a year (based on average salary of RM2,000 per month, 0.5% EIS contribution rate and 10 million workforce).

Prime Minister Datuk Seri Najib Tun Razak recently said the EIS would benefit about 6.5 million employees nationwide.

"It is inaccurate to claim that the EIS would benefit 6 million workers. No benefit is gained unless one is retrenched, and if we use the 2008-2008 Asian financial crisis where only 0.6% (or 60,000 employees) of the total workforce was retrenched, only [those few] are expected to claim from the EIS, which is being financed by the remaining 99.4%," FMM president Tan Sri Dr Lim Wee Chai told reporters at a press conference today.

Lim, who is also executive chairman of Top Glove Corporation Bhd, said that even during the financial crisis, the industry had to fork out RM30 million to compensate retrenched workers.

"The issue now is the collection by the government from the EIS. There is a disparity between the amount which will be collected and what will be paid out. What exactly is the RM1.2 billion going to be used for?" Lim lamented.

It is unclear whether the EIS — which has been approved by the Cabinet and will be tabled in the next Parliamentary session in June — will affect foreign workers too.

Further, FMM said it did not find any justification for the scheme's implementation as the country's existing labour laws on termination are "well in place and being enforced".

"We have labour laws to protect. And under these laws, companies are obliged to provide retrenchment benefits to laid-off employees. If the government really wants to protect those who are not compensated (in cases where loss-making companies are out of funds), then the EIS will need to be tailored for that very purpose," Lim said.

"If it's possible, we would like to see this scheme not implemented. Even if it will be put into place, then reduce the contribution rate," he said.

Meanwhile, FMM added that it is still "opening its doors" for further discussions with the government on its proposed EIS model.

 

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