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First contribution to EIS will only begin in January 2019

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The Malaysian Human Resources Minister Richard Riot Jaem has said that the Employment Insurance System (EIS) will be implemented next year, reports Bernama.

The EIS Bill, passed by the Dewan Rakyat last week, aims to provide workers who have lost their jobs with temporary financial assistance.

At the the Human Resources Development Fund (HRDF) annual Deepavali open house in Kuala Lumpur yesterday, Riot added that the contribution payments, however, would only begin in January 2019.

“As of now, the government has already contributed a total of about RM122 million for the EIS, just to make sure it takes off the ground,” said Riot.

He also dismissed claims that the EIS would overlap with the existing Employment Termination Layoff Benefit (ETLB) scheme, explaining: “The current ETLB will continue to be implemented. This (EIS) is on top of the ETLB.”

“This is the first time the EIS is being implemented while ETLB has been there for many, many years. Of course, we do not want the ETLB to stop there, it must continue because they (employees and employers) have already contributed,” he continued.

The minister also said that the monthly subscription of 0.4% of the insured’s salary would be split equally between employer and employee, and that the insurance system would benefit employers by increasing the productivity of companies through employees who have undergone skills and re-training programmes.

However, according to a report by Free Malaysia Today, the Social Security Organisation said that the EIS may not be sustainable if the current combined contribution rate remains at 0.4%.

Based on projections made by the International Labour Organisation (ILO), Malaysia’s 50:50 contribution rate is the lowest in the world, said Socso EIS chief Mohd Sahar Darusman in an interview with FMT.

This is in comparison with similar programmes implemented around the world, where the employers’ contribution rate is much higher than the employees’ contribution rate.

Sahar explained that EIS’ accumulated fund may be enough for less than five years if the current combined 0.4% contribution rate remains, and that most employer groups do not see the need for a sustainable fund.

He further points out that employers shouldn’t see the EIS as a burden, but as scheme that protects both employees and employers, particularly in the event of an economic crisis when employers are unable to provide termination benefits for their workers.

Photo / 123RF

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