KUALA LUMPUR, March 23 — The federal government has agreed to implement the proposed Employment Insurance Scheme (EIS) which will affect an estimated 6.5 million workers in the private sector, Prime Minister Datuk Seri Najib Razak announced today.
He said a new law is being drafted and will be presented at the next parliamentary sitting in June.
He added that the law is expected to be enforced from January 1 next year, while the interest payment can be made from January 1, 2019.
“The government believes the EIS initiative is a long-term policy that will give a positive impact especially to workers and employers,” he said in a statement this evening.
He also said the insurance scheme has been proven to act as an “economic stabiliser” and helped sustain the economy in countries that have adopted it, especially during a crisis.
He added that the scheme will help improve the labour market’s efficiency by making companies more competitive, which will result in increased productivity.
The Bill was proposed by the government following concerns that the economic downturn would force companies to retrench workers.
However, employers are opposed to the scheme, claiming that its introduction will raise their operating costs and could affect businesses severely amid an economic slowdown.
A total of 91 industry organisations across various sectors registered their objection to the Human Resource Ministry as the EIS will require contribution from both employers and employees.
The industry players said they are already paying retrenched workers benefits.
They further argued that the entire country’s workforce paying contributions would only snowball into a fund of RM1.142 billion, while payout would only amount to RM17.13 million as there are currently just 0.03 per cent of workers who are not part of any existing retrenchment benefit list.