MTUC: Stimulus package for SMEs fails to protect workers’ job security, those earning between RM4,000 and RM8,000

KUALA LUMPUR, April 7 — The additional RM10 billion stimulus package for small and medium enterprises (SMEs) does not adequately protect workers whose wages fall between RM4,000 and RM8,000, the Malaysian Trades Union Congress (MTUC) said.

In a statement today, the MTUC’s secretary-general J. Solomon said the additional wage subsidy on top of an earlier RM250 billion recently announced by Prime Minister Tan Sri Muhyiddin Yassin only covers employees who earn RM4,000 and below in monthly salary.

“The government has once again passed up the chance to address the plight of workers earning between RM4,000 to RM8,000.

“We must make it clear that while we appreciate the government giving these workers a one-off handout of RM1,000, the money is hardly able to sustain them beyond two weeks or so.

“What this category of workers urgently require is a firm commitment from the government and employers that their jobs are safe,” said Solomon.  

He pointed out that, as these workers are not covered directly in any of the government rescue plans for SMEs, they are at the complete mercy of employers as a priority target for lay-offs or wage cuts to reduce overheads.

“In other words, the government's initiatives to avoid mass retrenchments remain a stark possibility for workers earning RM4,000 to RM8,000.

“MTUC therefore strongly urges the government to ensure the wage subsidy scheme does not preclude these workers,” he said.

While the MTUC appreciates the government’s additional stimulus package to help SMEs mitigate the economic downturn, Solomon said an immediate solution for this will be for the government to introduce an Emergency Employment Regulation to make retrenchment illegal for a stipulated period of time.

“We urge the government not to disregard this category of workers as they are caught between a rock and a hard place.

“They are not in the B40 (bottom 40) category but because they work in urban centres such as Kuala Lumpur, Johor Baru and Penang where the cost of living is higher than the rest of the country, their salary is hardly enough to sustain their families.

“Salary cuts or any job loss would be catastrophic for them in every aspect,” he said.

Solomon also cautioned that if the government does not step in with laws to prevent layoffs, workers will end up paying the ultimate price.

“Already, MTUC has received about 300 complaints of Malaysian workers being forced or ‘persuaded’ by employers to go on unpaid leave or take pay cuts.

“Workers whose contracts have expired were told to leave,” he said.

All this happened just three weeks after the movement control order (MCO) was enforced, he said, referring to complaints received by the MTUC.

The complaints mostly involved workers in industries of sole proprietorship and family-owned businesses, Solomon added.

“We believe the complaints are just the tip of the iceberg and will increase in time.  

“This is happening with utter disregard to the government’s strong warnings that employers must not lay off workers or cut their salaries during the MCO period,” he said.

Solomon also claimed that certain SMEs are attempting to make an unjust enrichment by fraudulently claiming the aid or subsidy granted by the government.

“We smelled a rat when SMEs retaliated against the disclosure of financial statements to establish the decline of financial performance to justify lay-offs or pay cuts.

“It is in this regard that we are also alarmed by another gift from the prime minister to the SMEs that employers can renegotiate their employment contract with workers, including an option for salary deductions and unpaid leave during the MCO,” he added.

In addition, Solomon said, the prime minister’s generous gesture to the SMEs is clearly detrimental to the interests of workers who now risk wage cuts to their already smaller salary due to the MCO which has denied them overtime and allowances.  

“And with the likelihood of the MCO being extended again, these workers will clearly suffer and be hard-pressed to sustain themselves and their families.  

“Giving employers leeway to rewrite the job contract of the workers at this point of time will have dire consequences on the survival of the employees.

“While the government says the revised contract must be mutually agreed upon, it is common knowledge that employers have plenty of subtle arm twisting tactics to force workers into submission, including the threat of retrenchment or VSS (voluntary separation scheme),” he said.  

The MTUC has therefore urged the government to revoke its greenlight for employers to review employment contracts and instead urge that the contracts are complied with.  

“Workers should not be the easy target in reducing costs while employers benefit from government assistance during bad times and dish out low wages to workers during the good years.

“We will be very surprised if the SMEs continue to complain following the release of yesterday’s additional stimulus package. They have been offered hard cash, zero interest loans, rental rebates and a host of other goodies that will greatly improve their cash flow, ensuring they stay afloat to tide over the economic downturn,” said Solomon.

He added that the onus is now on these SMEs to keep their business afloat and protect the jobs of their workers.

“Claims of being financially unable to pay wages given all the assistance they have received from the government will be construed as fraud.

“If they face any shortfall, they should use part of the various government’s financial packages to sustain the workers and stop making excuses at every turn to lay off workers or cut their salaries,” he said.      

The additional wage subsidy that was announced yesterday included increasing wage subsidies to a total of RM13.8 billion, which will benefit 4.8 million workers across the country.

The extended package unveiled yesterday followed strong criticisms by industries who felt left out by the RM250 billion Prihatin stimulus package.

From the total, RM100 billion was allocated for SMEs, although detractors noted a large chunk of it were just loans and guarantees.

The SME Association has said nearly all its members face cash flow problems and badly need direct assistance to avert closure.