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KCGCCI secretary-general: EIS will be a blow to local businesses

The Kuching Chinese General Chamber of Commerce and Industry (KCGCCI) is of the opinion that the Employment Insurance Scheme (EIS) will be a burden to employers in terms of costs, BorneoPost Online reports.

KCGCCI secretary-general Jonathan Chai disagreed with director of the Social Security Research Centre, Faculty of Economics and Administration, Universiti Malaya Prof Datuk Dr Norma Mansor, who had recently asserted that EIS would not burden employers in terms of costs.

Chai said under the proposed scheme, employers would have a statutory duty to make contributions and this clearly would increase the cost of operating businesses.

According to Dr Norma, the scheme would make it cheaper for employers to lay off workers in order to upgrade their technology and automate their businesses compared with the current workers’ protection scheme.

However Chai stated that this is "made on, among others, the assumption that retrenchment of workers happened to pace for automation and upgrading of technology."

"But not all employers who contribute to the scheme will go for upgrading of technology and if any employers intend to do so, they themselves should be the one responsible to deal with the retrenchment of their workers and not from the pool of funds where others are made to pay.”

Chai added that they "do not want any errant employers to take advantage of the proposed scheme where others are made to suffer, especially when someone is financially capable of upgrading the technology of his or her business."

ALSO READ: RM1.2bn additional cost expected to Malaysian businesses for EIS rollout

He pointed out that even amid the difficult business environment and deteriorating economy, there has been a series of policies put in place lately to escalate the costs of running business.

“Among the examples are the minimum wages policy and levies on foreign workers. And if the government goes ahead with implementing the proposed EIS, it will definitely be a blow to local businesses, affecting their sustainability or even survival,” he said.

Additionally, with the proposed EIS only benefiting workers when they are being retrenched, Chai pointed out: “Looking at the relatively small percentage of workers retrenched annually in this country, we don’t need a pool of funds serving such purpose at the expense of the private sector."

Chai said the sizable amount deployed in maintaining the proposed EIS “is self-defeating and contentious”.

He was of the opinion that if additional protection or benefits are required to be given to retrenched workers, the government should be duty-bound to make such arrangements.

READ MORE: New legislation seeks to bar cuts to wages and fixed perks in Malaysia

Photo / 123RF

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