Employers say no to retrenchment insurance plan

Office workers have lunch in front of the Petronas Towers shrouded in Kuala Lumpur. ― Reuters pic
Office workers have lunch in front of the Petronas Towers shrouded in Kuala Lumpur. ― Reuters pic

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KUALA LUMPUR, March 11 — The Malaysian Employers Federation has opposed Putrajaya’s plan to introduce an insurance scheme to protect retrenched workers.

The group said the Employment Insurance Scheme (EIS) will escalate operating costs and could affect businesses severely amid the economic slowdown.

“It will be an additional burden to the already high cost of doing business and will make Malaysian employers less competitive, especially given the challenging economic outlook,” the federation said in a statement.

Yesterday Deputy Human Resources Minister Datuk Ismail Abd Muttalib told the Dewan Rakyat that the Economic Planning Unit (EPU) has approved the planning papers for the proposal.

He said the paper will be presented to the Cabinet soon. If approved, the EIS Bill could be tabled in the next Parliament sitting.

MEF said it had already submitted a protest memorandum to Prime Minister Datuk Seri Najib Razak.

The Bill was proposed by the government following concerns that the economic downturn would force companies to retrench workers.

However, the federation said companies were already paying retrenched workers benefits.

It also said up to 99 per cent of the workforce will not benefit from the scheme despite making contributions as the retrenchment rate have remained less than one per cent.

“The retrenchment rate, even during the bad years, was at an average of 0.6 per cent of total private sector employees.

“If the EIS were to be set up, only 0.6 per cent of EIS contributors would benefit,” it said.

As an alternative, the MEF proposed a private savings scheme in which employees will contribute one per cent to a third Employees Provident Fund account.

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