Employment Insurance System widens social security net

KUALA LUMPUR: Beginning January this year, all private sector employees started contributing to the newly introduced Employment Insurance System (SIP).

Implemented by the Social Security Organisation (Socso), this insurance programme is seen as a new approach to helping retrenched workers.

The SIP will enable Socso to not only render temporary financial aid to workers who are laid off but also help them to find new jobs or participate in training programmes to enhance their skills or learn new skills.

It is a norm for any new policy or scheme to be subject to criticism and all kinds of allegations in the initial stage of its implementation and SIP is no exception.

For the record, some 72 countries worldwide, including almost all the 35 nations in the Organisation for Economic Cooperation and Development, have their own retrenchment insurance programmes.

In fact, it has been in existence since the early 20th century, with countries like France having introduced theirs in 1905 and the United Kingdom in 1911.

SIP is provided for under the Employment Insurance System Act 2017 (Act 800) which was passed by the Dewan Rakyat in October last year. It covers 430,000 private sector employers and 6.6 million employees.

Both workers and employers have to contribute to SIP. The employees’ portion is 0.2 percent of their pay, which is topped up with a similar contribution from their employers.

Human Resources Minister Datuk Seri Richard Riot has described SIP as a complex unemployment insurance programme that assured workers of a security net in the event of them being retrenched unexpectedly.

In a recent press statement to clarify the workings of the SIP, he said the term system was used as SIP comprised different components such as financial aid, job placement services and training.

SIP contributors who are retrenched are entitled to a job search allowance for up to six months to help them tide over until they find a new job.

Plans by Socso to collaborate with portals like JobsMalaysia (www.jobsmalaysia.gov.my) and JobStreet (www.jobstreet. com.my) to help the laid-off workers to find employment are also part of the SIP framework.

Socso is also working with various training centres in the country to retrain and upskill retrenched workers in line with the needs of the job market.

Stressing that SIP was not an unemployment benefit programme, Riot said it was introduced to enable workers to feel protected in the event of job loss.

“In other words, workers will be helped by the government if they were to lose their jobs,” he said.

It was the worldwide economic downturn in the early 1930s, dubbed The Great Depression, that spurred nations to implement the employment insurance system.

South Korea fortified its employment insurance system in 1997 to help its workforce cope with the financial crisis that gripped Asia that year. Thailand introduced its own employment insurance system in 2004 after recovering from a financial crisis that started in 2001.

After facing financial crises in 1997 and 2008, Malaysia realised how crucial it was to have an insurance system in place to protect retrenched workers.

SIP chief Datuk Mohd Sahar Darusman said during the crises, many employees found themselves jobless after the companies they worked for folded.

“Many of the affected workers failed to get any compensation,” he told Bernama in an interview recently.

Under Section 30 of the Employment Insurance System Act 2017, in order to be eligible for SIP benefits, the insured employee’s loss of employment must be due to one of the following: resignation under a voluntary or mutual separation scheme; closure of the workplace; workplace is not in operation because of a natural disaster, riot or civil commotion; or the workplace becomes unsafe due to fire or gas leak.

Workers can also seek SIP benefits if their company ceases operations due to bankruptcy or their employer has absconded or the terms and conditions of their contracts were not met.

The SIP also covers loss of employment due to companies downsizing following adoption of new technology.

Interestingly, the insurance system also protects workers who resign after being commanded by their employer to perform work outside the scope of their duties which endangers their health and safety.

Resignations due to sexual harassment or any threat to the worker or his/her family are also covered by SIP.

However, the insurance system does not cover contributors who resign voluntarily or lose their jobs due to misconduct or have retired or have completed their contracts.

For the first two months of this year, Socso has paid out benefits to 1,336 SIP contributors throughout the nation.

Applications for SIP benefits can be done online via Socso’s website at www.perkeso.gov. my/sip. Contributors must submit their applications within 30 days from the date their retrenchment takes effect.

They also have to submit proof of loss of employment, such as termination letter from the employer and a letter from the Manpower Department to confirm that they have been retrenched.

In the case of sexual harassment, the applicant is required to submit a copy of the police report.

Mohd Sahar, meanwhile, said many people still did not understand the essence of the contribution concept adopted by Socso.

“Socso contributions are based on the solidarity fund concept. All workers contributing to Socso share the same risks although they may be working in different industries,” he said.

Based on the solidarity concept, the contributors are in principle willingly paying monthly contributions to allow Socso to use the funds to provide benefits to workers who are involved in accidents at their workplace.

For further information on SIP, visit www.perkeso.gov.my/sip or call 0342645360.

Contributors can also visit any one of Socso’s 50 offices nationwide to enquire about SIP or other Socso schemes.