The scheme aims to benefit retrenched workers. The establishment of a fund for the purpose will add a financial burden to employers as they already pay for Employees Provident Fund and Social Security Organisation (Socso), with some contributing to the Human Resources Development Fund, insurance for foreign workers and medical benefits, among others.

THE Employment Insurance Scheme, proposed by the Malaysian Trades Union Congress (MTUC) since the 1990s, is materialising as the government is proposing a bill to that effect in Parliament in June.

The scheme aims to benefit retrenched workers. The establishment of a fund for the purpose will add a financial burden to employers as they already pay for Employees Provident Fund and Social Security Organisation (Socso), with some contributing to the Human Resources Development Fund, insurance for foreign workers and medical benefits, among others.

Therefore, to compel employers to contribute to another fund will add to their costs. Furthermore, not every company retrenches; it would be unfair to expect all companies to contribute to the said fund.

I had the opportunity to interview the late Tan Sri Harun Hashim, a former Supreme Court judge, when he was the dean of the Ahmad Ibrahim Kulliyyah of Laws, International Islamic University Malaysia.

He had suggested that every individual, on turning 18, should register with Socso by paying a minimal fee. The person should be given a reference number or a card. He need not pay anything as he is not yet employed and may pursue his studies. When the time comes for him to take up employment, he will not be employed unless he had registered with Socso. He will have to produce his Socso card to activate his account.

Harun also said Socso was a good scheme that should cover the entire working population. When a person is injured, he will need medical care, and when he is hospitalised, he would only need to produce his Socso card. Rather than burden the government, the funds would come from Socso, enabling the public to obtain better medical facilities.

Similarly, when a person is retrenched, the retrenchment benefits should be paid out by Socso on a weekly basis for a period of time, perhaps for a maximum of 12 weeks, a reasonable period for a person to seek alternative employment. If the person has obtained employment within the period, the payments will cease. This is like a safety net.

There are cases where, for example, an employer cannot afford to pay his workers when they are retrenched because the factory has been destroyed in a fire. Through this arrangement, the workers can receive some form of payment.

In the case of errant employers who might abuse the scheme, for example, by dismissing workers, Harun was of the view that such employers should be prosecuted in court, and if such an employee was dismissed under Section 20(1) of the Industrial Relations Act 1967, he should be awarded a higher amount of compensation if he succeeded in his claim.

Employers who have a genuine need to retrench will be assisted by the fund. Those who choose not to retrench will benefit as they will gain the respect of employees who, in turn, will remain loyal to the company, thereby increasing productivity.

If a good employer faces difficulty, for example, if his premises is wiped out in a fire, the fund will come in handy. So, in the long run, he does not lose anything.

A trade unionist once said employers must not make the mistake of being penny wise and pound foolish by not wanting to contribute a mere 50 sen per worker towards the establishment of the fund. By ensuring that there is a social security safety net to protect the nation’s workforce, employers would be protecting their businesses in times of economic uncertainty.

Professor Dr Ashgar Ali Mohamed, Dean, Ahmad Ibrahim Kulliyyah of Laws, International Islamic University Malaysia

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