FMM welcomes govt move to review Employment Insurance System

The Federation of Malaysian Manufacturers (FMM) welcomes the government’s move to review the Employment Insurance System (EIS) as it believes the current model was neither balanced nor equitable. — Reuters pic
The Federation of Malaysian Manufacturers (FMM) welcomes the government’s move to review the Employment Insurance System (EIS) as it believes the current model was neither balanced nor equitable. — Reuters pic

KUALA LUMPUR, June 18 — The Federation of Malaysian Manufacturers (FMM) welcomes the government’s move to review the Employment Insurance System (EIS) as it believes the current model was neither balanced nor equitable.

The scope for the scheme is too wide and should only cover workers retrenched because of business failure and not due to downsizing which should be handled by employers wgo should rovide termination benefits.

“Allowing workers to enjoy both employment termination and lay-off benefits under the Employment Act, including those who are in voluntary separation schemes and mutual separation schemes, would result in these workers benefiting twice.

“This is against the principle of social security as clearly stated in the Social Security Act,” it said in statement, adding that the unnecessary strain on the fund by including training, should be excluded and could be carried out by the Human Resources Development Fund, financed by forfeited levy and late payments’ interest.

FMM also said that employers and employees contributing to the EIS were also very concerned over the management of the fund.

“Poor management and unwarranted expenditure will lead to unjustified increases in the contribution rate.

“We maintain that the fund is a tripartite responsibility which the government will contribute towards the operating expenditure of managing the fund,” it said.

FMM believed that instead of two funds, which would require two different sets of resources, whether human, as well as, investment in operating systems, the EIS should be managed by the Social Security Organisation (Socso), especially since the contributors are of the same group of people.

As Socso was in the process of adjusting its system to allow employers to make a single payment for both Socso and EIS by end-2018, FMM said the exercise should be widened to include single management of funds but with separate accounts to ensure transparency in the disbursement and management of funds.

“We look forward to the government calling for public consultation with all stakeholders in its review exercise so that there is a better understanding of the concerns and proposals by employers on improvements to the EIS to be more transparent and efficiently managed without unnecessarily raising the regulatory burden for both employers and employees as contributors,” it added. — Bernama

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