THE Employment Insurance System (EIS), which was supposed to have given workers more peace of mind, could cause them more heart break this year.

The country’s largest private sector union group fears that more workers could lose their jobs this year compared to 2017 as unscrupulous bosses use the EIS as an excuse to lay off or retrench staff.

This is compounded by the government’s recent decision to allow companies within the manufacturing sector to have 100% foreign workers in their production lines.  

The majority of those laid off will be from the Bottom 40 income group, who occupy semi-skilled jobs in the manufacturing and services sector, said the Malaysian Trades Union Congress (MTUC).

Currently, the EIS does not contain measures to discourage employers from laying off workers for spurious reasons.

“We support the EIS but we wanted the EIS not to be abused,” said MTUC secretary-general J. Solomon.

“With EIS, employers can tell workers, ‘I will retrench you because now you can get money from EIS’.

“We do not want them to use EIS as an easy route to reduce their workforce,” Solomon told The Malaysian Insight.  

The EIS, which came into effect this year, is a financial scheme that helps laid off workers for up to six months.

Retrenched workers receive a percentage of their last drawn salary every month until they get re-employed or until the sixth month of being unemployed.

The EIS is funded by employee and employer contributions and managed by the Social Security Organisation (Socso).

Currently, employers pay 0.2% of an employee’s salary while workers also contribute 0.2% into the scheme.

The scheme will involve 430,000 employers and 6.6 million employees.

EIS disconnect

MTUC’s fears are not unfounded as the organisation has seen a long-running trend of companies shedding Malaysian workers and replacing them with foreigners, who are paid less, said Solomon.

“If we continue to have an irresponsible human resources minister and irresponsible employers who are allowed by the government to replace locals with foreigners, then we will have more job losses.”

According to the Malaysian Employers Federation (MEF), a grouping of private sector associations, up to September 2017, 30,700 workers lost their jobs.

MEF executive director Shamsudin Bardan said up to 50,000 workers may be retrenched this year.

Shamsudin had said 2018 will be a challenging year for jobseekers, as companies have to deal with increasing operating costs, one of which is the EIS.

However, Human Resource Minister Richard Riot refuted this, saying that the number of lay-offs in 2018 would likely be around 30,000 jobs.

The MTUC had wanted the government to include elements of the code of conduct for industrial harmony into the EIS to prevent abuse, said Solomon.

A section of the code spells out ways for employers, unions and employees to work together to prevent retrenchments.  

He added that that there was a disconnect at the government level about EIS’ purpose.

“You have government officers saying proudly that they were able to pay 800 workers under the EIS,” said Solomon, when the reality is that these employees had lost their jobs.

Such a boast is as inappropriate, as it is akin to an insurance company being proud it pays out more and more death and disability benefits.  

This mentality reflects the poor attitude of the human resources minister, who Solomon claims is not serious about worker welfare despite passing the EIS.

“He does not even reply to letters from MTUC or the unions, and we are one of the biggest stakeholders,” said Solomon.

“He also only convenes the tripartite meeting between MTUC, MEF and the government once a year. We believe he needs to be replaced after the general election.” – February 8, 2018.