Business Economics

Covid-19: How far will one-off aid help Malaysians? Not much you would think…

Zaidi Azmi
Written by Zaidi Azmi

KUALA LUMPUR – April 19, 2020: When the government’s RM500 handout was finally wired into his account, furloughed roadside stall cook, Mohd. Akmal Harith, was over the moon as he had no income because his boss had to close shop due to the partial lockdown.

That was eleven days ago and today Akmal’s worry over his financial position resurfaced. Why? He did the maths and his already depleting RM500 would not last until next month.

“In May, I will get the remaining RM300 from the government’s one-off payout for singles. That money would likely last until the middle of May. After that, I think I’d be penniless if the situation prolongs,” lamented the 28-year-old Kelantanese.

Ever since the nationwide movement control order (MCO) was enforced on March 18, the government has doled out a myriad of financial assistances, cash payouts and job retention schemes – totalling RM260 billion – to help stimulate the economy.

For furloughed employees of small businesses like Akmal, his boss – on paper – is entitled for a conditional government wage subsidy of RM1,200 a month for three months for each staff starting from April 1.

And unlike its medium and large counterparts, Malaysia’s job retention scheme for small businesses does not need for the latter to furnish details proving a 50 per cent profit drop since January 1.

The only condition stated was a pledge to retain all staff.

“I tried telling my boss about the scheme [wage subsidy]. He was happy at first but grew reluctant when I brought up the matter a few days after. He never told why though,” Akmal said.

His boss’ hesitancy might stem from the fact that to qualify for the subsidy, a business needs to register and contribute to the Social Security Organisation’s employment injury scheme which is alien to many small businesses in Malaysia, particularly roadside eateries.

It is also an open secret that this type of small businesses – which are the hardest hit throughout the Covid-19-induced-MCO – has low levels of compliance to the requirement set by regulatory authorities including those of the Inland Revenue Board.

But the worry over possible abuse of the subsidy has been making rounds on social media, as the money will be credited into the company’s account instead of directly into the employees’, meaning that the latter is entirely at the former’s mercy.

On Facebook, employees have floated the supposedly peculiar antics of employers who wanted them to sign a letter stating that they “willingly requested for a pay cut throughout the span of the MCO.”

A junior dietitian who requested anonymity said he too was asked to sign a letter which he refused as he knew the company had succeeded in applying for the subsidy scheme.

“If I sign the letter, my salary will be reduced to RM600. It is the exact amount of top-up money that I will be getting from the government. So if I only get RM600 then does that mean my company is essentially paying me nothing?” was his rhetorical poser.

According to guideline from the Labour Department (for Peninsular Malaysia), an employee’s pay cut notice must be accompanied with a written greenlight from the department and the cut will only affect the following month’s salary.

How other countries aid their workforce

But wiring wage subsidy into employers’ account instead employees’ is not something that only Malaysia does.

However, unlike Malaysia, these countries’ wage subsidy schemes are calculated based on a fixed percentage instead of a specific figure.

The United Kingdom, for example, will cover 80 per cent of furloughed workers salary up to £2,500 pounds a month and while the scheme will be made available in mid-June it covers backdated wages starting from March 1. (It was announced recently that the scheme will be extended to end June.)

As for Australia, not only that it has a similar job retention assistance but the government also has an allowance for unemployed job-seekers. A sum of A$1115.70 will be doled out every two weeks starting April 27 and will continue to be given for six months.

Under its enhanced Job Support Scheme, the Singaporean government will pay for 75 per cent of the wages of every Singaporean worker in employment, up to the first S$4,600 of their monthly salary, for the month of April.

The country will also pay salaries of all quarantined workers, including foreigners, throughout the duration of their isolation, deeming that such period of absence is akin to a hospitalisation leave.

Like Singapore, Canada also will give a wage subsidy of 75 per cent of a worker’s salary but the money will be disbursed weekly at a maximum of C$847 per week from March 15 to June 6.

But what sets Canada’s scheme apart from others is the lack of red tape. Employers will not be expected to submit any paperwork to the Canada Revenue Agency at the time of the application.

Our close neighbour Thailand has yet to introduce any job retention schemes but has however announced a monthly 5,000-baht cash handout from April to June.

And while it is so far one of the few countries to not announce a one-time payout, the government has also clarified that it currently has enough money only to disburse the handout for a only.

Nevertheless, there are no other countries besides Malaysia and Australia – for now – that allow its people to prematurely dig up money from their retirement savings in order to cope with the economic impact.

A comparative list of welfare and job retention related Covid-19 assistances done by several countries

CountryWhat do their people get
United KingdomGovernment-paid wages for furloughed employees
• Will cover 80 per cent of workers salary up to a total of £2,500 pounds a month. Will be made available in mid-June
• Will cover backdated wages starting from March 1 and will last until June.
• Employers need to apply through the Revenue and Customs Department (HMRC) and if the application goes through, the latter will reimburse the employer.

Self-employment income support scheme
• Applicants can claim grants – from the HMRC – worth 80 per cent of their trading profit up to a £2,500 pounds a month
• The scheme will be made available by mid-May. The money given does not need to be repaid.
• Open to those whose trading profits that are no more than £50,000 and more than half of total income
AustraliaJobKeeper payment
• A job retention scheme in which the government will provide a payment of $1,500 per eligible employee for every two weeks.
• This scheme starts from March 20 to September 27, 2020.
• Payment will be to the employer in monthly arrears by the Australian Tax Office (ATO)

JobSeeker payment
• A self-explanatory allowance for eligible jobseekers in which up to $1115.70 will be doled out every two weeks.
• Payment will start on April 27 and those eligible will continue to receive it for a period of six months as long as the recipients remain eligible.
• The scheme is regulated by Services Australia – the government outfit that manages the allowance’s disbursement.

Early and easy access to retirement savings
• Australian workers can withdraw up to $10,000 of their savings in 2019-20 and a further $10,000 in 2020-21.
• Applications can be through the ATO. The scheme will be made available from April 20, 2020.
Cash handouts
• A one-off payment of $750 for every households on welfare including pensioners, carers, veterans, families and young people.
SingaporeCash handouts for all adult Singaporeans
• A one-off payout of $900, $600 or $300 depending on income groups. Parents with at least one child aged 20 years below in 2020 will get an extra $300 in cash.
• Disbursement will be done in April and June.

Additional $100 payout for elderly Singaporeans
• Eligible for Singaporeans aged 50 years and above. The money will be directly wired into their bank account.
• Disbursement will be done in April and June.

Workfare special payment
• All eligible Singaporean employees and self-employed will receive a cash payout of $3,000 that will be disbursed in two equal payments of $1,500 each in July and October 2020.

Grocery vouchers
• Available for all Singaporeans aged 21 years and above, who live in 1-room and 2-room HDB flats and do not own more than one property will receive $200 grocery vouchers in the fourth quarter of 2020.

Wage-subsidy
• Under the enhanced Jobs Support Scheme (JSS), the government will pay for 75 per cent of the wages of every Singaporean worker in employment, up to the first S$4,600 of their monthly salary, for the month of April.

Waiving levies and rent
• Rents for industrial, office and agricultural tenants of Governments by one month.
• Stallholders in hawker centres managed by the National Environment Agency will continue to have their rents waived for three months, while commercial tenants will receive two months of rental waivers.

Salary payment for quarantined workers
• Workers, including foreign ones, will continue to be paid their salaries for the duration of their quarantine.
• Their period of absence from work is treated as paid hospitalisation leave, as part of the worker’s leave eligibility.
MalaysiaCash handouts for the middle and lower income
• A one-off payment.
• Households earning RM4,000 or below will receive RM1,600.
• Households earning RM4,000 above will receive RM1,000.
• Single Malaysians aged 21 and above earning between RM2,000 and RM4,000 will receive RM500.
• Single Malaysians aged 21 and above earning below than RM2,000 will receive RM800.

One-off payment to e-hailing drivers, students and pensioners
• RM500 will be disbursed to 120,000 e-hailing drivers in the country in April, 2020.
• RM200 will be given to higher institution students.
• RM500 will be given to pensioners.

Government wage subsidy for workers with a salary below RM4,000
• RM1,200 a month for three months per workers for employers with less than 75 staff.
• RM800 a month for three months per workers for employers employing between 76 to 200 staff with a 50 per cent drop in business since January 1.
• RM600 a month for three months per workers for employers with more than 201 staff with a 50 per cent drop in business since January 1
• The subsidy will kick-in from April 1.

Rental waiver for those staying in public housing
• Exemption of rental for those staying at Projek Perumahan Rakyat and other public housing for six months.

Discount on electricity bill
• Discounts of between 15 to 50 per cent for electricity usage up to a maximum of 600kW a month for six months starting from April will be given.

Moratorium on all banking loan repayment except that of credit card.
• An automatic deferment that spans for six months.
• Borrowers can, however, inform their respective banks if they want to opt out.

Special grants for small-medium enterprises (SMEs)
• A special grant of RM3,000 for each applicant.
• The SMEs must register with the Inland Revenue Board to enjoy said grants.

Early and easy access to retirement savings
• EPF members below the age of 55 – permissible withdrawal age – can now withdraw up to RM500 a month for a year starting from April.
• Application can be made through EPF’s website. The money however will be deposited into their bank accounts from May 1, 2020.
CanadaEmergency Wage Subsidy
• Provides a qualifying entity with a wage subsidy of up to 75% of eligible remuneration paid to an eligible employee in a week for the period between March 15 to June 6, 2020, up to a maximum of $847 per week.
• Eligible employers that experience a prescribed reduction in revenue (e.g. generally 15 per cent in March and 30 per cent in April and May) may receive the subsidy.
• Qualifying employers may apply for the CEWS through the Canada Revenue Agency’s (CRA) My Business Account portal.
• Employers will not be expected to submit any paperwork to the CRA at the time of application but may need to later to verify its attestation in the event of an audit by the CRA.

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About the author

Zaidi Azmi

Zaidi Azmi

If Zaidi Azmi isn’t busy finding his way in the city, this 26-year-old northern kampung boy can be found struggling to make sense of the Malaysian political scene. Zaidi can be reached at zaidiazmi91@gmail.com.