KUALA LUMPUR, April 29 — The Employment Insurance Scheme (EIS) , which came into force on Jan 1 this year, is a move into the right direction to safeguard the interests of both employees and employers as Malaysia moves towards becoming a high income nation by 2020.

Acting as a ‘safety net for retrenched employees, EIS is crucial to mitigate the impact of involuntary separations to employees, by protecting workers’ welfare and ensuring training, as well as upskilling during periods of job transitions.

Social Security Organisation (Socso) chief executive officer Datuk Seri Dr Mohammed Azman Aziz Mohammed said EIS, which was implemented as a social insurance scheme, was an effective approach to solve issues related to workers who lost their job to obtain financial assistance when the employers became insolvent.

“The EIS covers bigger scope of loss of employment, such as retrenchment (termination), voluntary separation scheme (VSS), force majeure, employers who abscond, bankruptcy, closure of business, business restructuring, redundancy, automation and other factors.

“All laid off employees are entitled to claim from the EIS,” he told Bernama in an exclusive interview here recently.

According to Prime Minister Datuk Seri Najib Tun Razak, the EIS, designed to help workers and employers cope with demanding labour markets, would benefit 6.5 million workers in the private sector.

It was first introduced in Budget 2015 to assist retrenched workers by giving temporary financial assistance and providing opportunities for re-skilling and up-skilling.

Under the EIS scheme, a contribution of 0.2 per cent is borne by the employer with 0.2 per cent from the worker.

Bank Negara Malaysia, in its 2017  Annual Report, stated that while these reforms may entail some short-term adjustments, the measures are necessary to put Malaysia’s labour market on a more competitive, resilient and flexible path going forward.

Despite dissatisfaction raised by the Federation of Malaysian Manufacturers (FMM), Dr Mohammed Azman said for a start, the acceptance level of both employers and employees was good since Socso embarked on two roadshow series nationwide, with an average of 500 companies participated.

Although the system was still being developed and contributions needed to be paid manually in the beginning, he said the EIS had accumulated a total of RM140.3 million contributions from more than 340,000 companies as of April 16 this year.

On the eligibility for EIS , Dr Mohammed Azman said those who had contributed at least 12 months would be entitled to a minimum of three months financial benefits, with each of them receiving RM600 monthly (for a maximum of three months) as interim payments.        

“This payment will be made to workers who lost their jobs in 2018. This interim assistance is paid from the RM122 million allocation from the government,” he said.           As of April, Socso,  which is managing the scheme, has received 6,602 applications for interim assistance and 4,423 people have received the financial support, amounting to RM2.65 million.

“A total of 1,182 applications have been rejected, mostly due to voluntary resignation and the loss of employment occured before 2018.

“The remaining 1,195 applicants are still in process and under investigation to verify the loss of employment,” he explained.

Asked on the status of other regulations related to employees, Dr Mohammed Azman said the implementation of the EIS did not diminish workers’ rights for compensations under the Employment Act 1955 and the respective ordinances of Sabah and Sarawak were still valid.

“The same goes for workers who are terminated on the basis of voluntary or mutual separation scheme,” he said.

Describing EIS as a dynamic policy instrument, Dr Mohammed Azman said the rate of its contribution and benefits depended on the sustainability of the fund, and any adjustments would  be deliberated in the Employment Insurance Committee before they were tabled to the government.

Thailand and Vietnam were among the first Asean countries to adopt the EIS. In the Asia Pacific region, Canada, Chile, China, Japan and South Korea, are also enforcing the EIS. — Bernama