KUALA LUMPUR: The Malaysian Trades Union Congress (MTUC) which represents half a million private sector employees sees the
Employment Insurance System (EIS) as a new protection for workers.
The EIS Bill was passed by the Dewan Rakyat last night.
MTUC president Abdul Halim Mansor in welcoming law makers approval of the bill said the introduction of the EIS was also timely now, considering the soft job market and tough global economic climate.
“MTUC thanks Prime Minister, YB Human Resource and MOHR, Employer Association and Tan Sri Zainal Rahim KPPA for all the effort,” he said in a statement today.
“Though it has been nearly 20 years since the idea of a “safety net” for retrenched workers was first mooted, notably after over 50,000 people loss their jobs following the 1997 Asian Financial Crisis, the Malaysian Employers Federation (MEF) feels the Federal government pushed through the policy without taking into account the views of employers.
“On the other side of the fence, the Malaysian Trades Union Congress (MTUC), which represents over 500,000 private sector employees sees the EIS as a “New Protection", “ he said.
Under the EIS bill, employers and employees will contribute 0.2 per cent each of an employee's salary, which will go towards an accumulated fund, where retrenched workers could claim financial assistance from.
The scheme will involve 430,000 employers and 6.6 million employees.
Abdul Halim said under the existing Employment Act 1955, the only retrenchment benefits workers get are 10 days salary for under two years of service, 15 days salary for under five years of service and 20 days salary for anything above that.
“But currently, this is lopsided because if an employee suddenly quits his job without serving notice, he would be expected to pay the company a month's wages”, he said.
He adds that under the Employment Act, companies were also required to have reserves for retrenchment benefits, though this had not been enforced by the federal government.
“At the end of the day, it's a fund for protection. Just like automotive insurance. You pay for insurance but only claim when there's an accident, and the contribution rate of 0.2 per cent is a small and fair amount for this protection,” he said.