PUTRAJAYA should disclose all big-data projections and actuarial calculations related to the Employment Insurance System (EIS) Bill 2017, a PKR MP said today after the bill was tabled for the first reading in the Dewan Rakyat this week.

Kelana Jaya MP Wong Chen said there was a severe disconnect between the contributions for the scheme and the expected payouts, a differential at a massive 6.7 times. 

“Assuming the average income of workers is RM2,000 a month, the monthly contribution will be RM24.60 per month. The Malaysian Employers Federation (MEF) reported that we have 6.8 million workers who will be covered under the scheme. This means that the annual contribution of all workers and their employers will be RM24.60 X 12 months X 6.8 million workers, which equals to RM2 billion. 

“Assuming the retrenchment rate is 50,000. Under this bill, the average proposed payout to retrenched workers can, therefore, be estimated at RM1,000 ( half of their salary) X the maximum six months of benefits X 50,000 retrenched workers per year. This works out to a yearly payout of RM300 million.

“The bill calls for RM2 billion in annual contributions but then pays out an estimated RM300 million,” he said in a press conference at media room in Parliament today. 

The scheme requires both employers and employees to contribute to the system on a monthly basis, based on a contribution scale outlined in the bill.

He added that employees and employers would be forced to pay more than twice, forcing an average worker and his employer to pay RM300 a year. 

“In actual fact, the government only needs RM135 (per worker) a year or in other words, workers and employers are being forced to cough up an additional RM1.1 billion a year. What does the government intent to do with the annual excess of RM1.1 billion a year?,” he said. 

Wong also advocated for a fairer three-times differential, which would allow the government to collect RM900 million a year. 

“The government should aim to collect RM900 million a year because they have to pay out RM300 million. In case the economy collapses totally and 150,000 people out of job next year, they can at least cover for that,” he said.

“Asking the people to pay 6.7 times more is crazy. They should make the maximum … three times. The fundamental question is why are you collecting more than is necessary?” 

One of the provisions in the bill seeks to prohibit employers from reducing the wages of employees, or discontinuing or reducing benefits solely by reason of their liability for any contributions payable under the proposed act.

Employers found guilty of violating the rule could be fined up to RM10,000 or jailed up to two years or both.The bill also protects those who are made redundant by their companies, allowing them to submit an application to claim benefits within 60 days of the date they lost employment.

The bill also protects workers who are made redundant by their companies, allowing them to submit an application to claim benefits within 60 days of losing their jobs.

It states that loss of employment occurs when the contract of service of an insured person, or employee, is terminated or becomes invalid.

It does not cover voluntary resignations, the expiry of the contract; termination of the contract by mutual consent, completion of contracted work, retirement or termination because of misconduct.

What is claimable includes a job search allowance, re-employment allowance and training allowance.

The bill was tabled by Human Resources Minister Richard Riot, and the scheme will be managed by the Social Security Organisation (Socso). It will come into force on January 1 next year.  

Later, Klang MP Charles Santiago suggested using surplus funds in the Human Resource Development Fund (HRDF) and Socso as a way to lighten the burden of employers and employees.

“This, together with a RM1 contribution from each worker, payments from employers and government in the next (coming) years, could make the scheme highly sustainable in the long-run. 

“What is needed is the political will on the part of the government to commit RM750 million from HRDF to EIS’s coffers.”

Santiago said the RM1 contribution would inject about RM19.5 million into the EIS fund.

“Through this strategy, the government could contain the financial burden of workers, use underutilised HRDF funds optimally and reduce the financial burden of employers. And EIS does not become a burden to its key stakeholders.” – August 3, 2017.