EIS another way of imposing tax on employees, employers – DAP man

KUCHING: A local opposition leader claims that the real intention behind the implementation of the Employment Insurance Scheme ( EIS) ‘ is to fill the lacuna of the national coffers’.

In his statement, Padungan assemblyman Wong King Wei said the proposed EIS was another way of imposing tax on the employees and the employers.

“The lacuna is the result of leakage, wastage, corruption and mismanagement,” he said yesterday when commenting on the EIS Bill, which was tabled for first reading in Parliament on Aug 1.

Wong, who is also the state Democratic Action Party ( DAP) Socialist Youth (Dapsy) chairman, said the proposed EIS would stand as a good scheme to give protection to retrenched workers before they could find new jobs.

However, he also felt that it was a bad motive behind a good move – to absorb more funds from the people.

“As per the study by SBF ( Sarawak Business Federation), the government is expected to collect RM1.63 billion a year from the one per cent annual contribution (0.5 per cent each from the employers and the employees) while in fact, only RM65 million is needed a year.

“Bear in mind that the contribution of EIS is continuous yearly without any cap. This will lead to EIS funds being excessively accumulated. This is dangerous – there are risks of the money being misused.”

Wong pointed out that such collection of funds would jeopardise the local economy as it reduced the purchasing power of the people. As such, he concurred on the proposal by SBF that the EIS fund ought to be capped at RM1 billion.

“I share SBF’s view that the EIS fund should be capped at RM1 billion and upon reaching this figure, the contribution should cease.

“Furthermore, it is a good suggestion by SBF to ask the government to contribute to the fund too,” he added.

Last Thursday, SBF president Datuk Abang Abdul Karim Abang Openg said it was not against the proposed EIS; rather, it viewed that major changes had to be made to the Bill being presented to Parliament.

According to him, the proposed collection of the EIS Bill would see RM1.63 billion being collected a year based on a calculation of 6.8 million employees times RM2,000, and further multiplied by 12 months.

“Based on the Labour Department’s records, during the period of 2007 to 2016 (the recession years), only an average of RM65 million a year of retrenchment benefits were left unpaid by errant employers.

“Even if we double this benefit now, a maximum amount of RM130 million is needed under the EIS. Moreover, less than 0.5 per cent of all employees who would be paying for the proposed scheme for life would ever get to benefit from it – even if they do, they are covered for a maximum of three months’ salary over a six-month period,” said Abdul Karim.

Thus, he proposed a contribution of RM1 each per month for the employers, the employees and the government, which would raise RM245 million a year (6.8 million employees x RM3 x 12 months).

“This is more than sufficient to cover the expanded maximum benefit of RM130 million or the past actual experience of only RM65 million per year,” he added.

On Aug 1, Human Resources Minister Datuk Seri Richard Riot tabled the EIS Bill for first reading in Parliament.

The proposed scheme is aimed at helping to provide financial assistance to private workers, who have lost their jobs, until they find new employment. Retrenched workers will also be given assistance in searching for new jobs, as well as career counselling and training.

Employers found guilty of violating the rule can be punished with a jail term of up to two years and a maximum fine of RM10,000.