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Employees’ insurance scheme too small to cause retrenchment

Zaidi Azmi
Written by Zaidi Azmi

KUALA LUMPUR – January 4, 2018: The Malaysian Trade Union Congress (MTUC) has slammed the Malaysian Employers Federation (MEF) for claiming that the employees’ protection scheme is one reason why 50, 000 Malaysians are expected to lose their jobs this year.

MTUC president Abdul Halim Mansor feels that it is unfair for MEF to pin some blame over the job loss estimate on the recently imposed Employees Insurance Scheme (EIS).

Under the EIS, both employer and employee are required to collectively pay a monthly contribution of 0.4 per cent which will enable the latter to enjoy unemployment benefits for up to six months following a resignation or lay-off.

Halim said that if MEF executive director Datuk Shamsuddin Bardan’s estimate is correct, the bleak job outlook is largely due to the employers’ inability to be innovative in times of economic uncertainties and their over-reliance on government assistance.

“Having an employee protection scheme is important as it can attract foreign investments. In fact, MTUC believes that the decision to impose EIS, increase the minimum wage and maternity leave were long overdue.

“Hence MTUC urges the government to issue a directive to all employers that local workers must be the last to be retrenched compared to foreign workers,” said Halim’s statement.

Shamsudin however was not the first to spoke about the alleged negative effects of the EIS.

Last year, DAP member of parliament for Tanjong, Ng Wei Aik, claimed that the EIS was bad for employers and employees as it would raise a company’s operational expenditure.

Halim however argued that EIS monthly contribution rate is reasonable given that the economic welfare of employees is not well protected in case of retrenchment or bankruptcy.



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