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

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

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If the Employment Insurance Scheme (EIS) is implemented by January 2018, employers and employees in Malaysia face upto RM1.2 billion additional costs annual, says Federation of Malaysian Manufacturers (FMM) president Tan Sri Lim Wee Chai.

Speaking to Bernama at a media conference, he based the calculation on an average annual salary of RM24,000, for 10 million local employees at 0.5% EIS contribution rate. "It would add an extra burden to all companies in the country," he said.

Under the EIS proposal, employers and workers are each required to contribute 0.25% of the median wage of RM1,800 every month. [Read more about the EIS background]

Lim said the existing labour law was good enough to protect retrenched workers, citing that out of the 60,000 (or 0.6%) of the total workforce who were retrenched during the 2008-2009 financial crisis, the law had allowed 95% of them to receive compensation from their employers.

"It's not that we are against the principle (of the EIS) of helping the lower income group when they lose their jobs. "But, to collect RM1.2 billion a year to help the remaining 5% laid-off workers is like using a big canon to kill a small mouse," he quoted, in an Astro Awani report.

His recommendation is for the government to come out with a tailored scheme for the 5% of employees who failed to receive compensation. He added the FMM was open to further discussions with the government over the matter to find a win-win solution.

FMM currently represents more than 2,600 manufacturing and manufacturing services companies in Malaysia.

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