FMM: EMPLOYMENT INSURANCE SYSTEM SCHEME UNBALANCED

The Federation of Malaysian Manufacturers (FMM) has reiterated that the model of the Employment Insurance System (EIS) is unbalanced.

FMM said in a statement yesterday the scope of EIS is too wide and should only cover those retrenched because of business failure. The EIS should not encompass company downsizing because in such a situation, employers would have already provided for termination benefits.

“The current model allows workers to enjoy both the employment termination and the lay-off benefits under the Employment Act 1955, including those who are in voluntary separation schemes and mutual separation schemes.

“Essentially, this group of workers are enjoying double benefits. This is against the principle of social security, which is clearly stated in the Social Security Act,” it said.

FMM said the EIS has also resulted in “unnecessary strain on the fund by including training, which should be excluded and carried out by Pembangunan Sumber Manusia Bhd financed by forfeited levy and late payments’ interest”.

Despite that, the agency has accepted EIS and welcomed the recent announcement by Human

Resources Minister M. Kulasegaran that the government will review the EIS.

FMM said employers and employees contributing to the EIS are also worried about the management of the fund.

“Poor management and unwarranted expenditure would lead to unjustified increases in the contribution rate.”

FMM maintained that the fund should be a tripartite responsibility, that is, the government should also contribute towards the operating expenditure of managing the fund.

“We are also of the view that instead of two funds, which would require two different sets of resources, whether human as well as investment in operating systems, the EIS should be managed by the Social Security Organisation (Socso), especially since the contributors are the same group of persons,” it said.

FMM understands that Socso is adjusting its system to allow employers to make a single payment for both Socso and EIS funds by the end of this year.

“The exercise should be widened to include single management of funds, but with separate accounts to ensure transparency in the disbursement and management of funds,” it added.