SMEs say unemployment a non-issue, no need for benefits
KUALA LUMPUR, June 9 — Small-medium enterprises (SMEs) have flatly rejected Putrajaya’s plan to introduce unemployment benefits, saying the move would unnecessarily burden employers.
Small-Medium Industry Association of Malaysia (SMIAM) members, who were present during a dialogue today with the Human Resources Ministry and the Social Security Organisation (Socso), said unemployment is a “non-issue” and an unemployment insurance (UI) scheme would send the “wrong message” to employees.
They stressed that employees were already adequately compensated under the present Employment (Termination and Lay-Off Benefits) Regulations 1980 which provides for compensation to workers who are retrenched.
File photo of workers at a glove factory in Klang. SMEs say an unemployment insurance scheme would send the ‘wrong message’ to employees. — Reuters pic“If the government is going to push for the UI, the SMEs are worried. We are worried that by implementing this, the wrong message will be sent to employees.
“They should work hard to get better welfare, not at the expense of employers,” SMIAM president Teh Kee Sin said.
Most of the SMIAM members present were vocal with their dissatisfaction over the UI scheme, with some questioning the federal government’s motives behind the “sudden proposal.”
Some of the attendees likened the “lack of transparency” in the UI scheme with that of Putrajaya’s new healthcare plan, and demanded access to more information.
“Is this political, introducing UI to benefit all the employees? What’s the reason behind this?” said a member who only wanted to be known as Ong.
Another SMIAM member, Alfred Loke, said he had hardly met anyone who complained of having a problem obtaining a job in Malaysia, where unemployment rates are consistently low at just over three per cent.
“Everyone is complaining of the difficulty in getting workers, staff. UI is a non-issue as far as Malaysia concerned. The country is experiencing more than full employment.
“As it is, most of us here would agree our general attitude of workers here is not desirable,” he said to cheers from the audience.
Malaysian Plastics Manufacturers’ Association vice-president Eddie Fong said the real issue was not about unemployment insurance, but about getting “qualified” employees.
“It is very difficult to get qualified people to operate machines. You train foreign workers, then after a while they go back home.
“The cost of running business is so high; if UI is introduced it might be the last straw that breaks the camel’s back.
“We (already) have adequate cover for workers,” said Fong, referring to the current laws on termination of employees.
“Who is going to administer this? Why raise a RM100 million fund to solve a RM25 million problem? The government can bear the costs,” he added.
Malaysian Employers Federation (MEF) president Dr Michael Chiam said current laws on termination benefits of employees have to be repealed if UI comes into place.
“We are not totally rejecting, but it must not be a double-whammy,” he said.
Ummar Jai Abdullah, the principal assistant secretary of the policy and international division in the Human Resources Ministry, said UI was still at a “consultation” and “fact-finding” process.
He said an interim report on the stakeholders’ views on the UI scheme should be completed by October, and that its implementation should begin some time next year.
The Malaysian Insider has learnt that Putrajaya completed consultations with stakeholders at local and national levels last month for UI, with a proposed contribution from the government and employers each doubling what employees fork out.
SMEs, who have previously complained of crippling wage bills under the minimum wage policy announced on Labour Day, are questioning the need for more compulsory labour costs.
Making up 99 per cent of operational companies and employing 59 per cent of the labour force, or seven million workers, SMEs are the most labour-intensive, with 15 per cent of manufacturing costs coming from human resource.
According to the Malaysian Trades Union Congress (MTUC), the umbrella body representing 800,000 workers from 390 unions, the government completed “regional and national satellite workshops on May 24 to gain feedback” from the three main stakeholders, i.e., the government, employers and workers.
“The steering committee is led by Socso. The International Labour Organisation (ILO) has been involved from the start and will send in their expert advice by the end of June,” MTUC secretary-general Abdul Halim Mansor told The Malaysian Insider.
The Malaysian Insider also reported this week that the general election will likely be delayed until November to allow the ruling BN to shore up support with Deputy Prime Minister Tan Sri Muhyiddin Yassin suggesting that more cash handouts are in store.
Putrajaya has previously toyed with the idea of a retrenchment fund to be set up with equal contributions from both employers and employees but the plan was met with scepticism from companies.
The UI appears to be a revival of the idea as Abdul Halim had also told The Malaysian Insider last month that the government was drafting legislation to introduce the fund.
Most developed economies practise a form of unemployment benefit, with the United Kingdom practising a Jobseekers’ Allowance (JSA), commonly known as “the dole.”
The British scheme compels those seeking welfare payments to commit to actively seeking employment but imposes no time limit, leading to accusations that many of the 5.5 million on the dole are purposely trying to remain unemployed.
The United States, however, imposes a 99-week limit on unemployment benefits. But both these countries have an unemployment rate of over eight per cent.
Headwinds from the euro-zone crisis and a cooling Chinese economy have also hit Malaysian exports, slowing growth to 4.7 per cent for the first three months of the year, the third consecutive quarterly drop since Q2 2011.
Several manufacturing associations told The Malaysian Insider recently they are already “cautious” and looking to “consolidate rather than expand” over the next 18 months without added pressure on their balance sheets from contributions to UI.
