AT the tripartite workshop on the establishment of a retrenchment insurance scheme on Tuesday, position papers were presented by the Malaysian Trades Union Congress (MTUC) and the Malaysian Employers Federation (MEF).
As the MTUC mooted something similar in 1998 and more recently in 2009, the MTUC's position is quite clear. The MTUC president was quoted as being "happy" that it is in the pipeline. Though there has been no press report on the MEF position, its country report to the board of the Asean Conference of Employers last month provides an indication. Its stance is that "employers should be allowed to manage and administer their own retrenchment fund and there was no need to contribute to such retrenchment fund or participate in the proposed unemployment insurance". But as this was a response to the proposal by the Performance Management and Delivery Unit (Pemandu) Lab on Human Capital Development that the scheme be managed by the Employees Provident Fund, it may have changed its position now that the Social Security Organisation (Socso), the third party and chair of the tripartite project committee, seems to be the agency to do it. But then again, as the MEF opposition was based on the view that "present labour laws are sufficient to protect retrenched employees" and unemployment insurance "served as a bailout for recalcitrant and badly managed companies" and "punish the good and well-managed employers", this does not seem likely. Indeed, some time ago, the MEF suggested instead a retrenchment subsidy fund to assist companies to retain rather than retrench workers by subsidising their salaries.
To be sure, the Employment Act provides for severance pay, the retrenchment benefits are quite generous and some employers pay more than the minimum rates. But as the National Economic Action Council (NEAC) and the MTUC have observed, many more do not make the payments required by the law. These create major financial problems, especially for retrenched workers who are sole breadwinners. Although they are supposed to notify the Labour Department of intended lay-offs, many don't. As the NEAC argued, it is such "gaps and inefficiencies" that makes it necessary to include an unemployment insurance scheme in any labour safety net.
Certainly, there are issues concerning the eligibility and duration of income support for the retrenched, as well as the sources and mechanisms for funding. But as assistance is available from the International Labour Organisation, such issues are capable of resolution. Admittedly, a lot of hard work remains to be done to reconcile the divergent positions. That said, however, the Malaysian experience in building consensus gives hope that this is not an insurmountable task.