PAYMENT RATE FOR PROPOSED EMPLOYMENT INSURANCE SYSTEM REDUCED TO 0.2pc
Bill to be tabled this month will see lowest contribution rate in the world
THE Employment Insurance System (EIS), which will be tabled in the Dewan Rakyat this month, will see the contribution rate reduced from 0.5 per cent to 0.2 per cent.
The amount, said Human Resources Minister Datuk Seri Richard Riot, would be contributed equally by both employers and employees.
“This is the lowest rate of contribution in the world,” he said in a statement yesterday.
“A tripartite engagement was held on Aug 10, chaired by Second Finance Minister Datuk Seri Johari Abdul Ghani and three ministers to obtain consensus with regard to the EIS contribution.
“In principle, all stakeholders had reached an agreement that the contribution rate shall be reduced from 0.5 per cent to 0.2 per cent, which is to be contributed equally by employers and employees.”
The EIS bill was first tabled in the Parliament on Aug 1, but was delayed due to objections from employers and trade unions concerning the contribution rate of one per cent (0.5 per cent employee and 0.5 per cent employer).
Riot said on March 17, the government decided to implement the EIS with effect from January next year and the first benefit payment would be made in January 2019.
The EIS is a social safety net that aims to help workers who lose their earning salary resulting from loss of employment.
The objective of the EIS is to provide immediate financial assistance, enabling the beneficiaries to cover their living expenses during the transition period until they gain employment.
The EIS also provides employment services, namely job search, career counselling, job matching and job placement.
“The government believes that the EIS will play a significant role as a stabiliser of the economy and has positive impact in maintaining economic activity in a sustainable manner, particularly during economic slowdown or recession,” Riot said.
“The implementation of the EIS will improve the efficiency of the labour market through the matching of labour supply and demand more efficiently, thereby increasing the productivity and competitiveness of the industry.” Meanwhile, Riot said the ministry, through the Social Security Organisation (Socso), had conducted a briefing on the proposed implementation of the EIS yesterday.
Among the information discussed were the estimated EIS fund collection in 2018 (RM479 million), as well as on the projected number of persons who would be eligible for interim EIS payment in 2018 (57,282 people).
Riot said a decision was made for employers and workers to contribute 0.2 per cent equally based on the workers’ insured wages.
According to him, higher voluntary contribution would not be allowed.
“Workers who leave their employment voluntarily, working on fixed-terms contracts, retired and dismissed due to misconduct would not be eligible to claim for the EIS benefit,” said Riot.