Employment Insurance Scheme in 2018

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The Employment Insurance System giving employees financial help, upskilling opportunities and job counselling will come into effect in 2018. These long-term benefits will not only protect them but help their bosses as well.

The Employment Insurance System (EIS), which is designed to help workers and employers cope with a demanding labour market, will start next year.

Prime Minister Datuk Seri Najib Tun Razak announced yesterday that the scheme will benefit around 6.5 million local employees in the private sector.

“EIS is aimed at employees who have lost their jobs. It will be a social safety net meant to provide financial help and assistance for workers in their job search,” he said in a statement.

He said that employees will get temporary financial help and will be assisted in looking for a new job through a job-seeking programme.

The employees, he added, will also be given retraining or additional training to upgrade their skills.
He said that the new policy will be tabled in the June meeting of the Parliament.

The policy is expected to be implemented on Jan 1, 2018 while payment of the benefits will start on Jan 1, 2019, he said.

He added that the scheme will be funded through premiums paid by both employees and employers.

The Social Security Organisation (Socso) will be managing the scheme, he added.

He said that the implementation of the scheme is expected to bring long-term benefits to both employees and employers in the country.

“EIS will add to the efficiency of the labour market (in the country) through a better system of matching supply and demand, and lead to increased productivity and competitiveness of the industries,” he said.

He added that similar schemes in other countries have shown that it can act to stabilise the economy and help sustain economic activities in a country, especially during times of economic crisis.

However, representatives from at least 90 industry and trade-based organisations voiced concerns over the EIS.

Malaysian Employers Federation executive director Datuk Shamsuddin Bardan said EIS was not practical as the retrenchment rate was less than 1% over the past two years.

“We are talking about the whole workforce contributing to a large pool which will be used to serve a minimal number of people,” he said.

Based on briefings with the Government, he said, both the employers and employees were required to contribute 0.25% of the employees’ salaries to a fund managed by Socso (Social Security Organisation).

The money, he said, would be used to help those retrenched but did not receive their termination benefits.

This group would be paid half of their last salary until they find a job or for up to six months, added Shamsuddin.

Shamsuddin said an estimated RM1.142bil is expected to be collected by EIS annually based on 6.8 million people in the private sector.

He said lay-off and retrenchment benefits under collective agreements were good enough to protect the employees.

Instead, he proposed for employers who do not pay retrenchment benefits to be charged in court.

Also present during the press conference were the Associated Chinese Chambers of Commerce and Industry of Malaysia, SME Association Malaysia, Malaysian Plastics Manufacturers Association, Malaysian Textile Manufacturers Association, Malaysian Associated Indian Chambers of Commerce and Industry, Federation of Malaysian Manufacturers and Malaysia Shopping Malls Association.

Source ; The Star (24 March 2017)


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