Harapan MPs question gov't's EIS calculations, offer alternative

A PKR lawmaker has urged the government to disclose all calculations related to contributions and pay outs, under the proposed Employment Insurance System (EIS) Bill 2017. 

Kelana Jaya MP Wong Chen said that while he supports the intention of the bill to introduce unemployment benefits, his personal calculations has suggested a “severe disconnect” between proposed contributions for the scheme and its expected pay outs. 

“We cannot blindly push this bill without full financial disclosures as the ultimate contributors are the workers and the employers,” he stressed in pointing out that the bill is likely to be tabled for second reading and debated by next week. 

“The bill calls for RM2 billion in annual contributions but then pays out an estimated RM300 million. 

“This is a massive 6.7 times differential of contributions to pay outs,” he explained. 

There are three contribution scales listed in the bill and Wong said he chose the medium rate to illustrate his point. 

“Assuming the average income of workers is RM2,000 a month, the monthly contribution will be RM24.60 a month,” he said, adding that the RM2 billion sum is calculated from the annual contributions of 6.8 million workers who will be covered under the scheme as estimated by the Malaysian Employers Federation. 

As for the RM300 million expected pay outs, Wong said the amount was calculated from an estimated 50,000 retrenched workers, based on a projected increase from 44,000 workers retrenched in 2015. 

The EIS Bill, among others, seeks to provide unemployment benefits for three to six months.

According to Wong, his own calculations then showed that the government is forcing the average worker and employer to contribute more than twice of what is required to meet the expected pay outs. 

He went on to suggest that RM900 million in annual contributions or a three times differential rate would be “fairer and more appropriate” for both parties. 

Using his own RM900 million figure, Wong said employers and workers are now forced to contribute an additional RM1.1 billion in excess funds.

“What does the government intend to do with the annual excess of RM1.1 billion a year?” he said in raising questions whether the government intended to use the new system to prop up its finances in the backdrop of a cash flow crunch. 

‘Large pool of idle funds’

Klang MP Charles Santiago, meanwhile, echoed Wong’s concerns over the need to maintain a large amount of annual surplus under the EIS.  

“Why collect a huge amount of money when the retrenchment payment is only 30 percent of total collections?

“This money will be underutilised and sit idle,” the DAP lawmaker pointed out. 

In the current situation where workers and employers are already feeling the pinch, Santiago argued that the scheme may instead lead to more local workers losing their jobs as higher production costs will make employing foreign and undocumented workers very attractive. 

As an alternative to collecting more contributions through the EIS, Santiago suggested for the government to introduce similar benefits by utilising surplus funds under the existing Human Resources Development Fund (HRDF) and the Social Security Organisation (Socso).

“This (existing surplus) together with a one-ringgit contribution from each worker, payments from employers and government in the next years could make the scheme highly sustainable in the long run,” he said.

On top of calling on the government to disclose its calculations, Santiago also said an impact assessment must first be conducted to establish how the current proposal will affect workers and small and medium industries. - Mkini