KUALA LUMPUR: The Employment Insurance System (EIS) which will be tabled in the Dewan Rakyat this month will see the contribution rate reduced from 0.5 per cent to 0.2 per cent.
The amount, said Human Resources Minister Datuk Seri Richard Riot, will be contributed equally by both employers and employees.
“This is the lowest rate of contribution in the world,” he said in a statement today.
“A tripartite engagement was held on Aug 10, chaired by Second Finance Minister Datuk Seri Johari Abdul Ghani and three other ministers to obtain consensus with regards to the EIS contribution.
“In principle, all stakeholders had reached an agreement that the contribution rate shall be reduced from 0.5 per cent to 0.2 per cent which is to be contributed equally by employers and employees.”
The EIS bill was first tabled in the Parliament on Aug 1 but was delayed due to objections from employers and trade unions concerning the contribution rate of 1.0 per cent (0.5 per cent employee and 0.5 per cent employer).
Riot said, on March 17 this year, the government decided to implement the EIS with effect from January 2018 where the first benefit payment will be made in January 2019.
The EIS is a social safety net that aims to help workers who lose their earning salary resulting from loss of employment.
The objective of the EIS is to provide immediate financial assistance, enabling the beneficiaries to cover their living expenses during the transition period until they manage to obtain suitable employment.
The EIS also provides employment services, namely job search, career counselling, job matching and job placement to help displaced workers get re-employed.
“The government believes that the EIS will play a significant role as a stabiliser of the economy and give positive impact on maintaining economic activity in a sustainable manner, particularly during economic slowdown or recession.
“The implementation of the EIS will also improve the efficiency of the labour market through the matching of labour supply and demand more efficiently, thereby increasing the productivity and competitiveness of the industry,” he said.