Monday, October 30, 2017

Employment Insurance System (EIS) - Good start but not good enough to resolve problems caused by UMNO-BN also?

Employment Insurance System (EIS) - A good move that will help 'out of employment' workers - oops...only retrenched workers. That is one of the flaws - as Malaysia today needs a scheme to help ALL workers that are unemployed until they find their next employment. Thailand has a scheme that helps all workers who are out of a job (including those who resign - who gets a lower rate) for a maximum period of 6 months.

It covers workers who have been retrenched but not those who resign voluntarily, Socso’s EIS chief Mohd Sahar Darusman told FMT in an exclusive interview...The EIS also does not apply to those who do not have their contracts renewed, employees terminated for disciplinary reasons and those who have reached the mandatory retirement age.

Thanks to the UMNO-BN government's failures, many workers in Malaysia now no longer enjoying regular employment(employment until retirement age) - and more and more only have short-term employment contracts(most are for less than a year). There is also no law that ensures workers get their contract extended, even when the employer still needs a worker to do the work, and most employers would choose not to extend these employment, chosing rather to simply employ a new worker.

Malaysia does not even have laws placing limits on the number of workers that can be employed on 'short-term' contracts. In some countries, there are quotas set - whereby the number of non-regular employees, which include short-term contract employees, are limited to reasonably 5-10% of the total workforce. In some countries, like India, the use of short-term employees are limited to work not being the core business of the employer. 

Short-term employment is a form of precarious work, and it will result in no annual income increment which happens with tenure for regular employees. It also will mean no more increment of rights like annual leave/sick leave. It also means no termination/retrenchment benefit. It will also be highly prejudicial for women, as employers will 'smartly' chose to avoid maternity leaves/benefits. Note that entitlement for retirement/retrenchment benefit is only for workers who have worked for more than a year. 

So, when a worker loses his/her employment when the short-term contract ends, it is not easy to find a new job especially in the same industry/trade, or even town. The chances of getting another job with the same or higher income also is slim. Naturally, employers will prefer younger lower-paid workers. The time lapse between end of contract and finding new employment takes time - which could be months, as now there is no provision for 'time out' to find a new job or attend interviews. 

The worker, in modern Malaysia, most likely will be burdened with monthly car/home/house appliances loan payments. They certainly need financial assistance for the period between employment. Better still, if Malaysia does the needful to restore the right of regular employment.

EIS scheme should be helping all workers during their period of unemployment - the government needs to provide for this necessary social security need.

EIS scheme will the first scheme that finally provides monies to workers in need. 

The last time, the government's scheme to prevent retrenchment/loss of employment was sadly only to provide monies to employers and/or other third parties - that was the HUMAN RESOURCES DEVELOPMENT FUND(HRDF). The idea behind that was to help employers train or re-train employees to prevent (or delay?) retrenchments. It was also available to other qualified entities to provide these training...But sadly the workers themselves did not receive the monies themselves - or maybe just some allowance for attending these trainings. That was a major disappointment for many - because it did not deal with 'financial assistance' to workers. Really, the obligation of training should be with employers - it must be an employer's obligation to train/re-train/improve skills of its existing workers to address the changing needs of employers. 

Of late, there has been many retrenchment, whereby we see that many of these retrenched workers have not been paid wages/allowance for several months before retrenchment, and also still not been paid their retirement/retrenchment benefits.

Well, for that blame will lie with the current UMNO-BN government, in particular the Minister of Human Resources and his Ministry. If we were to look at Malaysian labour laws, the Ministry has the power of 'inspection' - yes, they have the power to continuously monitor and inspect anytime to ensure that labour laws are being complied with by employers - If salaries/allowances are not being paid in time in accordance to law...if employers are in the process of disposing assets/monies possibly to shut down and/or retrench/terminate workers - the Ministry can do the needful fast...even possibly the power to freeze accounts/assets so that Malaysian workers do not end up being 'cheated' of their wages/allowances and even termination/lay-ff/retrenchment benefits. 

Well, look at the regular statistics provided by the Ministry, and you will find no information about the number of these inspections and enforcement of worker rights - the only statistics are about inspection to ensure occupational health/safety requirements are complied with. This demonstrates how the 'cheating' of workers of their wages/allowances/benefits are not a priority. On the other hand, when it comes to GST, there is so much regular 'spot checks' in even small shops to ensure that all amounts payable for GST is paid and no items are in the shop where GST is yet to be paid. Since no statistics, does that mean there is no inspection and enforcement of worker rights?

Looks like the monies/rights of ordinary Malaysian workers are simply not a priority. EIS will help remedy a little the UMNO-BN failings when it comes to retrenched workers - but alas, the fault also lies in the failure of the UMNO-BN Government.

How about the Opposition? Well, is worker rights even a priority? Will they at least guarantee the return of the right of regular employment to all Malaysian workers, which will also guarantee wage/right increase with tenure/age - something so vital for financial wellbeing of the worker and their families?

Now, the moment the worker loses his/her employment - he/she also ceases to be a union member - so, all these workers loses the right to union assistance/help. Without regular employment, the days of ONLY unions based on industry/sector/occupation/workplace only is draconian...short-term employees end up moving from sector to sector, and as such time to allow for unions of workers irrespective of industry/sector/occupation/workplace.

EIS is a good start - but alas, is the amount provided even sufficient? Is the duration of payment even sufficient? Most importantly, it must be a social security available for all workers - not just for retrenched workers - but all workers that are unemployed and/or between jobs.         

A government is and must be responsible for all its citizens - and it must provide sufficient monies and other assistance to the unemployed and the 'temporarily' unemployed.


EIS helps retrenched workers get back on their feet


KUALA LUMPUR: The Employment Insurance System (EIS), which will come into effect next year, will not only provide a safety net for retrenched workers but also valuable support services.

Tasked with managing the EIS, the Social Security Organisation (Socso) said the insurance scheme would involve 430,000 employers and 6.6 million employees.

It covers workers who have been retrenched but not those who resign voluntarily, Socso’s EIS chief Mohd Sahar Darusman told FMT in an exclusive interview.

The EIS also does not apply to those who do not have their contracts renewed, employees terminated for disciplinary reasons and those who have reached the mandatory retirement age.

There are two phases to the EIS implementation, with the first phase starting in 2018 and the second phase starting in 2019.

First phase

Beginning Jan 1, 2018, employers and employees will each have to contribute 0.2% of an employee’s base salary which goes towards an accumulated EIS fund.

The fund will be used for retrenchment payouts and support services from 2019 onwards.

The contributions to the fund is capped at a salary level of RM4,000 a month, which means that although a person may earn more than RM4,000 a month, his contribution is fixed at 0.2% of RM4,000.

“We will take one year to build this fund and our projection of collection for 2018 is RM479.5 million,” Sahar said.

He said the amount would only be utilised for those retrenched from 2019 onwards.

“Although there are some who calculate that based on a 100% collection, we can collect some RM600 million, the reality is that usually, we will be able to collect less than 100% as there will be some employers who don’t comply or workers who resign voluntarily and stop contributing until they get a new job.”

For the first phase of the EIS, Putrajaya has allocated RM122 million for retrenchment payouts for 2018. 

These payouts are known as interim benefits.

“For those retrenched in 2018, we will give them a fixed amount of RM600 a month for a maximum of three months of unemployment,” Sahar said, adding that Putrajaya would unveil more details on the interim benefits soon.

Second phase and support services

Under the second phase of the EIS, which starts on Jan 1, 2019, Socso will provide retrenchment payouts known as a job search allowance and support services. The job search allowance is based on a scaled amount.

Depending on how long a retrenched worker has been contributing, they could get up to a certain percentage of their last drawn salary for three to six months.

For the first month, it is 80%, then 50%, 40%, 40%, 30% and 30% in the successive months until the sixth month of searching for a job, or sooner if the person is successful in landing a job.

“When a person is retrenched, they are to come to Socso and claim their first job search allowance,” Sahar said.

Socso will then interview the retrenched worker and work with various government and private recruitment agencies to help find him or her a job.

“We will monitor the interviews that they are called for and liaise with the potential employers. If they get a job any time before the sixth month, then we stop paying the job search allowance for the subsequent months due.

“If they secure a job before six months, we will give them an Early Re-employment Allowance, which is 25% of their remaining job search allowance entitlement.”

Additionally, Sahar said if Socso or potential employers found that a retrenched worker needed to take a course to learn new skills or improve on their skills, Socso would pay for the training, capped at RM4,000.

“On top of that, while they undergo training, they will receive between RM10 to RM20 per day for a maximum of six months.

“The key success to the EIS is our support services and the monitoring of the support services,” he said.

Sahar said it was the support services which would eventually ensure retrenched workers gain re-employment.

“The EIS is a safety net, not a welfare programme. We want to make sure that people make the effort to get re-employed, that’s why our monitoring of the support services is crucial.

“If the retrenched workers don’t make an effort to gain re-employment, they will not be able to collect the benefits.”

The EIS bill was passed in Parliament last week. - FMT News, 30/10/2017

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