KUALA LUMPUR, Aug 8 — The Federation of Malaysian Manufacturers (FMM) welcomed yesterday Putrajaya’s decision to defer the Employment Insurance System (EIS) Bill in the Parliament.

The group however insisted it is not against the EIS, but said there has not been proper and open prior consultation with stakeholders, placing unnecessary burden on both employers and employees .

"The decision by the Government to initiate further consultation on the model involving four Ministers is definitely a step in the right direction,” it said in a statement.

The group said Putrajaya should include full details on the model, including statistics and calculations, during consultations with stakeholders.

FMM also urged Putrajaya to create "good regulatory practice” which would include carrying out a regulatory impact analysis and public consultation before any proposal.

"Adopting this proposal would help to ensure a conducive environment to attract investments and for businesses to prosper in order to achieve the country’s goal of developed nation status,” it said.

The EIS, which would allow retrenched workers to claim a portion of their insured salary for between three and six months of unemployment as well as allowances, was tabled for the first reading in the Dewan Rakyat last week.

Contributions to the Employment Insurance Fund, which will be based on the worker’s salary, are split equally between the employee and the employer. The contributions based on fixed rates range from 20 sen for workers earning RM30 monthly to RM59.30 for employees earning RM4,000 and above a month.

Employers have since expressed misgivings over the proposed law that would provide a safety net for retrenched and unemployed workers, citing the added cost as well as apparent redundancies.

The Malaysian Employers Federation also questioned the rationale of collecting an estimated RM1.6 billion annually for the EIS, or over five times the compensation for all workers retrenched in the Asian Financial Crisis.