MISUNDERSTANDING and confusion over the wage-subsidy programme (WSP) introduced to overcome hardship because of the Covid-19 pandemic are the main reasons for any abuse of the WSP, said employers.

Many employers also misconstrued the WSP, which resulted in abuse, they said, adding that some companies did make false claims.

Human Resources Minister M. Saravanan said recently about 400 employers and targeted industries had abused the WSP scheme to the tune of nearly RM20 million.

The scheme is a government initiative for employers and targeted industries under the Prihatin and the national economic recovery plan (Penjana) packages.

Malaysian Employers’ Federation executive director Shamsuddin Bardan told The Malaysian Insight the confusion among employers arose due to lack of understanding on the mechanisms of the scheme.

“The government thought that whatever money disbursed to the employer must be paid up to the employee, that’s how the issue of misuse came about,” said Shamsuddin.

“If you look into the scheme, only the employment-retention programme (ERP) under the first Prihatin where if you enrol your employee in the scheme, you need to pay the employee within seven days of receipt, but it is no longer there.”

Following the second announcement of the WSP under the Penjana package, Shamsuddin said Socso’s condition was to apply after employees have taken 30 days of unpaid leave and in which the company had not retrenched them.

Under these circumstances, the government will then pay each employee a RM600 subsidy, and this must be passed on to the employees on unpaid leave.

“That is the part where the employers are obliged to remit the money to employees.”

He said because employers have paid full salaries to during the movement-control order (MCO) and conditional MCO, employers then keep the money receiving the subsidies.

“When the employer keeps the money, some workers say that it should be paid to them. But the employers are saying that, ‘We already paid you full wages, you don’t deserve to be paid extra through the WSP’.”

Shamsuddin said when the government implemented the restriction orders, the industry was unable to meet and discuss with the Human Resources Ministry.

And when the media reported that employers were abusing the WSP, many misunderstandings occurred.

Shamsuddin also took Singapore’s wage-subsidy scheme as a comparison where Singaporeans aged 21 or above will receive a one-time cash subsidy of S$600 (about RM1,900).

At the same time, the government subsidised up to 75% the first S$4,600 of the monthly salary of more than 1.9 million Singaporean employees.

The first employment subsidy will also be issued to employers one month in advance from May to this month.

In WSP’s case, Shamsuddin said the original allocation was RM14 billion and when divided by the six-month period, the monthly allocation was about RM2 billion.

“If we compare the monthly salary paid by the private sector, which is RM27.5 billion, we can get its percentage, which is little. But if we compare with Singapore, they give about 70%, and some countries even get more than 80%.

“Of course, the government has also allocated an additional RM1 billion to the tourism and retail industries. We also understand the constraint and predicament faced by the government.”

Socso overwhelmed

Koong Lin Loong, chairman of the SMEs and taxation committee of the Associated Chinese Chambers of Commerce and Industry of Malaysia (ACCCIM), said there were two situations when employers applied for WSP.

First, they may abuse them and the second, they were ignorant of the mechanics of the scheme.

In some cases, the number of employees does not match the number of Socso contributors in an application, or that the employer applies for subsidies for part-time employees, he said.

The social insurance system will review these.

“Another situation is that when an employer submits an application for WSP but the employee has already applied for an employment subsidy, the employer must then inform Socso about it.”

He suggests that if an employee resigns during the application period, an employer must update the employee’s information online before receiving the subsidy.

Saravanan said once Socso receives a complaint, it will freeze the employer’s salary subsidy application for further investigation.

As for employers who have confirmed that they have abused salary subsidies, Socso has taken action. Currently, Socso has determined that 156 employers abused the WSP and had reclaimed the subsidies paid from them.

SME Association of Malaysia president Michael Kang, meanwhile, said the abuse of WSP by SMEs is rare.

But SMEs must return the subsidy amount to Socso if there any employee resigns, he said.

“These are the responsibilities of entrepreneurs. During the pandemic, we should not be greedy for petty gains and let the funds go to companies in need.”

He also met with Socso representatives last week to convey that there are SMEs that have applied for WSP but have not received it.

Socso said only 20 officers are handling the WSP procedures and 300,000 SMEs with more than three million employees had applied.

“We call on SMEs that are in urgent need of the funds to seek help from the association to contact Socso to speed up the handling of enterprises facing urgent situations.

“Some SMEs applied in July and have not yet received the subsidy. Among them, it was found that the information of some companies at the time of filing did not match Socso’s information. We suggest that SMEs update the information,” said Kang.

Employers are prohibited from retrenching employees after receiving the subsidy. Employers can negotiate with employees for salary reductions, and employees who have applied for hiring incentives can no longer apply for WSP. – November 29, 2020.