Malaysia studying unemployment insurance plan

Source From (Business Times): http://www.btimes.com.my/Current_News/BTIMES/articles/tokpa12/Article/

Published: on 13 Jun 2012

THE government is studying the feasibility of an unemployment insurance scheme, amid concerns raised particularly by small- and medium-sized enterprises (SMEs).


International Trade and Industry Minister Datuk Seri Mustapa Mohamed said the government had yet to decide on such a scheme as the study is ongoing.

The minister said it is currently at "fact finding and consensus building stage", adding that the final outcome will be known once inputs from every stakeholder has been considered.

"We hope to resolve the issue in less than three months," he added.

Mustapa, speaking to reporters after presenting the Miti Excel-lent Service Award yesterday, said a tripartite project committee had been formed to oversee the study.

The panel is chaired by chief executive officer of Social Security Organisation, with members from the Ministry of Human Resources, Malaysian Employers Federation and Malaysian Trade Union Congress.

As SMEs accounted for 99 per cent of businesses, Miti would take the lead to engage with the industry segment for consultation, he said.

Commenting on 2013 Budget, Mustapa said it will prepare the economy to face challenges arising from the current situation in Europe.

"Next year's budget would ensure the Malaysian economy would continue to grow at a sustainable level," he added.

The five per cent to six per cent growth projection on exports for this year was still on track, Mustapa said.

Meanwhile, the Federation of Malaysian Manufacturers (FMM) is against the scheme as it is an unfair cost burden on employers, who are made to pay for delinquent employers.

"Unemployment insurance would also send Malaysia down the slippery road of dole mentality and burgeoning social safety nets.

"There are already sufficient provisions in the labour legislation to take care of retrenched workers," FMM president Tan Sri Datuk Yong Poh Kon said in a statement.

Yong said, in Malaysia, only a small number of employers defaulted in payment of retrenchment benefits.

He said at the height of the financial crisis in 1998, the RM25 million unpaid retrenchment benefits was only five per cent of total retrenchment benefits payable as the rest was duly paid out.

He suggested alternative options such as amending the Companies Act to give priority of payments to workers ahead of all creditors, including government taxes, and carry out strict and swift enforcement on delinquent employers.