Storm In Employment Insurance System

The Malaysian Trades Union Congress (MTUC) has denied ever agreeing to the request by employers that only workers who do not receive termination or retrenchment benefits will receive payments from the Employment Insurance System (EIS).

Commenting on the statement by the Malaysian Employers Federation (MEF) that the human resources minister had given a “misleading statement” over the matter, MTUC president Abdul Halim Mansor said the only thing agreed in principle by the employee’s representative in the meeting with Second Finance Minister Johari Abdul Ghani on Aug 10 was the reduction in the contribution rate from 0.5% to 0.2%.

“MTUC never agreed to the request by employers that the EIS payments are only paid to workers who do not receive termination benefits under the Employment Termination Layoff Benefit (ETLB) or workers who are under collective agreement (CA).

“It is very unfair if workers’ contributions in the EIS fund is used to bail out irresponsible employers. The ETLB and the CA are the sole responsibility of an employer under the relevant laws,” Halim said in a statement today.

MEF’s executive director Shamsuddin Bardan recently said that Human Resources Minister Richard Riot Jaem had not given the whole picture of what was discussed in the meeting.

Riot had said it was disappointing that employers were still opposing the EIS despite the monthly contribution rate lowered from 0.5% to 0.2%, which would be contributed equally by employers and employees.

Shamsuddin, however, said that it was agreed in principle that the EIS was only applicable to employees that were terminated or retrenched but not paid retrenchment or termination benefits.

“What the minister said in his statement was that the EIS was on top of the termination or retrenchment benefits, meaning that an employee is paid termination or retrenchment benefits by the employer and still collects the EIS,” he was reported as saying.

Halim, however, said apart from the reduction in the contribution rate, no decisions were made on other matters discussed during the meeting.

He urged the MEF to be more responsible when issuing statements.

Halim said MTUC also firmly objected to the proposal by employers to drop the elements of employment services including training in the EIS.

“This component is an integral element of all EIS models and in line with the International Labour Organisation Convention No 168 (Employment Promotion and Protection against Unemployment Convention, 1988).

“We are also against the MEF’s proposal that 1MOC (1Malaysia Outplacement Centre) handles the job matching, job training or retraining of retrenched workers.

“MTUC is doubtful of the ability of 1MOC in providing comprehensive employment services throughout the country.

“This is because 1MOC only covers less than 20,000 employers and is more focussed on white collar workers, while the EIS has 430,000 registered employers and 6.6 million registered employees in the private sector, especially blue-collar workers,” Halim said.

He said the EIS would be fully operationalised in 52 Social Security Organisation (Socso) offices throughout the country leveraging on existing capacity and infrastructure.

Halim said MTUC was also against the MEF’s proposal to limit the period of EIS benefits payments to three months only.

“MTUC, on the other hand, requests the government to extend the period of benefit payments for the better protection of workers.

“MTUC urges the government to keep its promise to implement the EIS. If countries like Thailand, Vietnam and even Laos have such schemes in place, what else is preventing Malaysia, which is set to become an advanced and high-income country, from implementing the EIS?”

Halim said MTUC was expecting the EIS Bill to be tabled and subsequently passed unanimously in parliament in October 2017 and enforced on Jan 1 next year.

“MTUC has been championing the introduction of such schemes for a long time to ensure the well-being of workers and families in the event of loss of employment and source of income,” he added.