Social insurance is an investment
WE refer to the letter in The Star entitled, “Insecure social security system” published on Dec 21, by Ronald Benjamin, executive secretary of the Association for Community and Dialogue (online at tinyurl.com/star-security).
We firstly thank Mr Benjamin for his suggestions of how to improve the social security coverage in the country. That said, Mr Benjamin indicated there is an inadequacy or absence of Social Security Organisation (Socso) providence in emergency situations.
As stipulated under the Employees’ Social Security Act 1969, Socso provides social security coverage for employment injuries to all private sector workers in the country. The coverage accords medical treatment for the injured workers, including emergency medical treatment, outpatient and inpatient treatment, as well as post-acute/hospitalisation measures such as rehabilitation, physiotherapy and vocational therapy.
To improve the healthcare service received by our insured persons, a Healthcare Financing Scheme can be a potential solution as it would allow the insured persons to access both public and private healthcare services.
Responding to Mr Benjamin’s comment on the differences in insured sums based on the wage of the employee, we wish to explain that Socso’s social security schemes are based on the sharing of risk and pooling of resources concept for the purpose of replacement of income. This means Socso redistributes income from the fortunate to the less fortunate (vulnerable groups) through our schemes.
Other than permanent and temporary disability benefits, Socso’s benefits received by an insured person are not contingent on the income or contribution of the individual under the Employment Injury Scheme. For example, the medical benefit under this scheme allows workers suffering from employment injuries or occupational diseases to receive free of charge medical treatment at Socso panel clinics or government clinics/hospitals until they are fully recovered.
Nevertheless, we recognise that coverage gaps within the current social security system do exist. Workers in the informal sector and housewives are still not covered by any social insurance, which exposes them to vulnerabilities. Based on the 2017 Labour Force Survey conducted by the Department of Statistics, self-employed workers and homemakers consist of approximately 24% of the total working-age population. Besides taxi and e-hailing drivers covered under the Self-Employed Social Security Act 2017, the rest are left uncovered without any form of social protection.
Socso believes that there is a need to push for the expansion of social security structurally to ensure that all vulnerable groups are protected. In fact, Socso has initiated the Employment Insurance System earlier this year under the Employment Insurance System Act 2017 to cover workers who lose their employment. We are also extending the Employment Injury Scheme to foreign workers starting from Jan 1.
However, extension of coverage and benefits puts pressure on the sustainability of our social security fund. Since Socso’s inception in 1971, there has not been any increase in the rate of contribution set for both employers and employees. Under the Invalidity Scheme, employers and employees each contribute 0.5% of the employees’ monthly wages, while for the Employment Injury Scheme, employers contribute 1.25% of the employees’ monthly wages. Despite the fixed contribution rates, we are continuously reviewing and enhancing our benefits to provide the best protection to the rakyat.
Considering Socso’s long-term liabilities, further improvement and extension of benefits will affect the sustainability of the social security fund. Socso provides long-term benefits such as Permanent Disablement Benefit, Invalidity Pension, Survivors Pension, Dependants Benefit and other medical benefits. Extension of benefits is only possible if both employers and employees agree to an increase in the rate of contribution to Socso.
The challenge that Malaysia is facing now is a fragmented social protection system. For instance, in an event of contingency, a Malaysian might need to have several copies of photocopied MyKad and application forms to make a claim. This fragmented system causes an uncoordinated social ecosystem which will cause an improper distribution of benefits and wealth to the vulnerable groups in society. This has also resulted in cases where those who really need assistance do not qualify the means test for getting social assistance.
We believe that this is preventable if Malaysia’s social security system undergoes a reform. We are of the view that there is a need for an overhaul to create a social security ecosystem that ensures no one is left behind. Together with other stakeholders, Socso hopes to consolidate and coordinate the fragmented social protection landscape for comprehensive and adequate coverage for the rakyat in Malaysia.
At the same time, stakeholders, including the public, need to understand different forms of social protection.
Social protection includes social insurance, social welfare and old- age security. Socso provides social insurance and has related programmes for workers and their dependants; this covers more than half of Malaysia’s population.
Then, there is old-age security, which is handled by the Employees Provident Fund (EPF) in the form of retirement (old age) savings for its members, comprising private and non-pensionable public sector employees.
The Social Welfare Department, meanwhile, focuses on, among others, enhancing the community’s well-being with target groups that include children, persons with disabilities (PWDs), senior citizens, destitute persons, vulnerable persons (women and girls, single parents, domestic violence victims and the poor) and victims of natural disaster. There are also voluntary welfare organisations and NGOs providing social welfare services on smaller scale.
The understanding of social security among the public could be cultivated as part of the education system. There are local universities which are focusing on social well-being programmes, such as Universiti Malaya, Universiti Utara Malaysia and Universiti Putra Malaysia. We believe that a social security module should be introduced at the secondary school level so that Malaysians will have more understanding of social security and their rights to social protection.
Last but not least, social insurance should not be seen as a social cost but as a social investment. Providing social protection is about investing in people, where policies and programmes are designed to strengthen people’s capacities and skills, and support them to participate fully in the labour market and society.
The beneficiaries of social insurance are children and youth, women, jobseekers, PWDs, the homeless, the elderly, employers and the society. Employers gain from social insurance in terms of a bigger supply of healthier and more skilled workers while society reaps benefits such as higher productivity, more employment opportunities, better health and social inclusion, greater prosperity and a better life for all.