Employment Insurance System exists for workers

KUALA LUMPUR: On Jan 30, a Facebook user who went by the name of Jeff Jerry vented out his frustration on why workers have to contribute monthly for another social security scheme when they already have been contributing to the Social Security Organisation (Socso).

His Facebook posting vent viral. By the first week of March his posting had been shared 21,644 times, receiving more than 8,500 ‘likes’ and 8,200 comments. The numbers do not include the screenshots of the Facebook status published by online portals.

Jeff Jerry was disappointed at the Employment Insurance System (SIP) rolled out by Socso that came into effect on Jan 1, 2018.

SIP provides immediate financial help for workers who are laid off, and subsequently helps them to find new employment including by helping them to enhance their skills or learn new skills through training schemes.

Looking back, during the economic downturn of the 1980s and subsequently the financial crisis in the late 1990s, many employees lost their jobs without any compensation or short-term financial assistance to help them out until they found something else to do.

“Even big companies like Perwaja Steel and Mega Steel had downsized their workforce abruptly, with workers waking up without a job. In many cases most of those retrenched don’t receive any compensation. What a pity,” said SIP’s Chief Datuk Mohd Sahar Darusman during an interview with Bernama.

Based on the lessons learnt from the past, it is obvious that a fund is needed to help those who suddenly find themselves without a job. However, such fund will involve financial commitment from both the the employers and employees, hence it is only natural that they voice their displeasure over the idea.

“When they are laid off, they get angry. Now it is 2018, thank god our economy has remained stable. Though a scenario like in the 1980s or late 1990s is unlikely to happen, workers can still lose their jobs for many reasons and hence need a life line to help continue with life before finding a new job,” pointed out Mohd Sahar.

It has to be noted that of the 6.6 million workers, only 400,000 are unionised. Those represented by unions have their rights better protected as they have better bargaining power including in getting their dues when retrenched.

In safeguarding the interest of the workers, Socso started studying the idea of establishing SIP in 2009. After the numerous considerations, reviews, improvements, the bill on SIP was approved by the Parliament before it was signed into law and gazetted on Dec 28, 2017.

According to Mohd Sahar, other nations too have adopted safety nets for workers similar to SIP much earlier. Among the nations that provide relief for workers who lose their job are the United States, Japan, France, German, Canada, South Korea, Thailand, Argentina, Baharin and Vietnam.

In the United States and Argentina only the employers contribute towards the fund and the rest both the employers and employees contribute. For example, in France the workers’ portion is 2.4 percent of the salary while the employers contribute 4 percent. In Germany both the employers and employees contribute 1.5 percent each. In Canada the employer contributes 2.56 percent while the workers contribute 1.83 percent.

In Malaysia, the both employers and employees only have to contribute 0.2 percent. The monthly contribution rate for a worker earning no more than RM 1,000 is RM 1.90 per month. For those earning RM 4,000 and above, the maximum contribution is capped at RM 7.90.

This means a worker will be contributing a minimum amount of RM22.80 and a maximum amount of RM 94.80 per year but could expect a financial assistance of between RM800 and RM 3,200 in the first month after being laid off.

Even as SIP only came into force slightly more than two months ago, those affected could expect RM600 per month for three months though they may not have contributed much. This is because compensation paid comes from the RM136 million initial funding provided by the Federal Government in getting the SIP rolling, and not from the contributions. Even before receiving the contributions from the employers and employees, SIP has already started disbursing the funds to affected workers since January 2018.

“SIP serves as a social security net for the workers in the event if a worker loses his or her employment. Though there is the Employment Termination and Lay-Off Benefits (ETLB) available when workers lose their job, often the payment comes in late.

“Worst still, many get nothing when the employer absconds, or when the firms go bankrupt and liquidated. This leaves the workers in a lurch,” said Mohd Sahar.

While the ETLB only covers the workers earning RM 2,000 and below, the SIP covers workers across all salary scale meaning a bigger number of workers is insured by the fund.

Through SIP, the payout will be made immediately by Socso after receiving the application from the affected workers and after checking the fact that it is a genuine case.

Though the amount disbursed is not much, the affected workers will have some pocket money to tide over especially when they have families to take care. The money used by the retrenched employees too will keep the economy rolling.

By the first week of March, 980 people from all over the nation have become the beneficiaries of the SIP fund with the biggest number 237 coming from Selangor.

“We have to accept the fact that almost every day someone loses their job. SIP provides the avenue for us to help those who have been retrenched. Yet we are shocked to hear some people running down the SIP without checking their facts.

“SIP was set up for the sake of the workers’ welfare. Though now the assistance is very much limited to those who have lost their jobs, in future it may evolve to help workers facing other predicaments. Who knows there will be a day when SIP provides assistance for child births, helping workers start work at a new location and other assistance like the ones available in developed nations”, said Mohd Sahar.

In the developed nations, their SIP has evolved to provide greater benefits to the workers, for example South Korea has amended its SIP 28 times since first introduced in 1995. Currently, SIP in Malaysia provides both financial dan nonfinancial assistance.

The financial assistance include job hunting allowance, early return to work reward, allowance to compensate for lower salary, allowance for training of workers who want to learn new skills to reenter the job market.

Imagine, you have been loyal to an employer and had worked diligently for years only to find that you have been retrenched abruptly. You may have families to feed, so what are you going to do?

This is what happened to Shahrul Nizam Mustafa, 40, who was retrenched on Jan 2 after working as a printing machine operator for 14 years at a printing company in Batu Caves, Selangor.

Though he was compensated, Shahrul Nizam was still at a loss as he did not have paper qualifications to move on. To add to his woes, his wife is a homemaker and he has to attend to the needs of his five children including a five month old baby. After he took up the matter with Socso on Jan 3, he received the first payment of RM600 on Jan 10.

“When I took up my problem with them, they queried me when and why I was stopped from work. They also inquired whether I was terminated accordingly and was paid compensation.

“The SIP payment that I received was used to pay the school bus fee and the schooling expenditure of my children as school has just begun. The rest was used to feed the family,” said Shahrul Nizam whose three children are at school.

That’s not all, a week after he collected the payment Socso managed to find him new placement with the work description being similar to his earlier job.