ONLY close to 5% of self-employed individuals are currently covered by the Social Security Fund (Socso), indicating the reality that awareness of the social safety net is low.

The need to strengthen social protection for the informal sector has been highlighted by reports and experts in the past.

The number of Socso contributors from this sector is 134,600, and they contribute via the Self-Employment Social Security Scheme (SKSPS), Socso chief executive officer Dr Mohammed Azman Aziz Mohammed told The Malaysian Insight.

This is an increase in the number of contributors compared with previous years, with 78,834 of them signing on this year through government initiatives.

“This represents a 183% increase from 47,510 people in the same period last year,” said Azman.

“This indicates that more self-employed are aware of the scheme, an addition to other government initiatives for the self-employed, namely SPS PenjanaGig, SPS Lindung and SPS Prihatin Wanita.”

Seen from an overall perspective, however, the number of self-employed people covered by Socso’s SKSPS is still small as it is only 4.9% of the total 2.72 million self-employed, said Azman, citing figures from the Statistics Department.

By sector among the self-employed, the highest contributions are from food and goods delivery workers, with 49,738 contributors. This sector also forms the highest number of contributors to Socso.

However, based on the total number of self-employed workers, Azman said, it showed that 95% more are not covered by Socso.

“Despite the increase in the number of self-employed who have registered and are contributing to SKSPS, awareness of the social safety net is still low,” he said.

This can be attributed to a number of factors such as the failure of publicity campaign to reach targeted groups, apathy and scepticism towards the need for social security protection, plus the reality that many in the self-employed category are low-income and vulnerable workers, he said.

Under the SKSPS, 20 types of informal sector workers are eligible to self-contribute.

This includes those working in the passenger transport, fisheries, service of accommodation premises, professional, scientific and technical, carriage and delivery of goods or food, agriculture, livestock and livestock production, forestry, food preparation and sale, manufacturing products, construction works and hawking or trading sectors.

Other sectors are online businesses, information technology, collecting and processing of data, service of agent, private support services, performance, film activities, artistic and graphic work, services in care, treatment and recovery of health, mental, physical or social and household service.

Contributions under the scheme start at RM13.10 per month or RM157.20 per year, depending on the income level.

Meanwhile, Chief Statistician of Malaysia Dr Mohd Uzir Mahidin said 1.27 million people were employed in the informal sector in 2019. This represented 8.3% of the country’s overall workforce.

“Employment in this sector generally is not covered by social insurance protection,” he told The Malaysian Insight.

“Based on the Household Income and Basic Amenities Survey (HIES/BA), the contributions for own-account workers rose 15.3% from 2016 to 2019.”

Mohd Uzir also highlighted how informal workers from the B40 group lacked social protection. Only 0.2% of the 527,000 self-employed informal workers from this group are contributing to social security funds such as Socso and the Employees Provident Fund (EPF).

“From HIES/BA 2019 data, there are 9.7 million workers who are from the B40 group. Only 13.5% among them contribute to social funds such as EPF and Socso,” he said.

A long way to go

Commenting on the figures, economist Dr Yeah Kim Leng said while the increase in the number of self-employed contributors to Socso is encouraging, there is still a long way to go before a sufficient number of informal workers can be covered.

“The sobering reality is that the total registered represents slightly less than 5% of the estimated 2.72 million of self-employed in the country,” said the Sunway University Business School professor of economics.

“It suggests a long way to go before a sufficient number of self-employed receive some form of social protection against workplace accidents, loss of business income due to ill-health and other causes.” 

He said the Covid-19-induced recession, which began in the second quarter of 2020, has shed light on the vulnerabilities of informal-sector workers and the self-employed. These are workers most impacted by the pandemic, the ensuing health protocols and movement restrictions. 

“A social safety net would have helped ease the economic hardships faced by those in the informal sector, especially the self-employed.

“Another important social safety net function is that it would have eased the burden on government finances as economic relief and income support for the vulnerable groups could have been reduced.

“Moreover, larger and more targeted fiscal support could have been given to other vulnerable groups not covered by the social safety net.”

More strategies

Azman said Socso has developed strategies to promote social security protection to workers in the informal sector. 

“We have conducted engagement sessions with government agencies, gig platform service providers and relevant associations and organisations at all Socso offices nationwide,” he said.

Socso has also appointed corporate agents from among the agencies, associations, organisations and others. They are to facilitate the registration and payment of contributions to SKSPS by the self-employed. 

“These corporate agents will receive a fee from Socso for their work,” said Azman. 

The fund is also stepping up its publicity programme through mass media and social media, he said.

Yeah, on the other hand, proposed that various trade, business, consumer and community associations be mobilised to create awareness of the benefits of the Socso coverage.

“Socso, on its part, could look at enhancing the benefits to the self-employed, including seeking fiscal incentives from the government, so that the enhanced attractiveness of the social insurance coverage could attract a larger number of the self-employed to enrol.” – April 26, 2021.