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I refer to the proposal to introduce Employment Insurance Scheme (EIS) by January next year.

While there are advantages in having this scheme, I urge circumspection and robust implementation system to minimise abuse and leakages.

EIS per se is not inherently bad as pointed out by some. It is who we are as Malaysians that will be the cause of the problem. Please let me elaborate.

I think by now Malaysians must learn to accept two things. First we are very ‘kiasu’ people. We will take advantage on whatever that comes our way, regardless of our eligibility. Second, our implementation mechanism is mostly hopeless leading to countless abuses and leakages.

If thousands of individuals are found to apply for Bantuan Rakyat 1Malaysia (BR1M) fraudulently, I am sure EIS will face the same problem.

Rightly, EIS is meant for those who were retrenched, not those sacked from their jobs. To qualify for EIS, the retrenched workers must show records they are actively seeking other employments. The financial assistance provided should be for specific timeframe to prevent ‘lazy’ workers from abusing it. Usually payment for six months is sufficient for retrenched workers to get another employment position.

Socially-desired policies need honest people to make it a success. There will be ‘vagueness’ whether workers are retrenched or dismissed. There will be ‘ambiguity’ whether retrenched workers are actively seeking another employment post. There will be ‘arguments’ over the duration of unemployment benefit.

Are Malaysian workers and employers mature and honest enough to uphold the system which involves externalities and moral hazard? Even in developed countries, unemployment benefits are often abused.

The second aspect is implementation mechanism which I find very lacking in this country. If we look at our track records, there are just too many lackadaisical performances. We introduced the Goods and Services Tax (GST), but the people ended up paying much higher than the GST rates. We dished out BR1M, but we were not sure of the ‘right’ recipients.

We offered National Higher Education Fund Corporation (PTPTN) loans, but thousands ended up not paying it back. We gave fuel subsidies to fishermen, but we are not sure they have used the fuel to catch fish.

All these programmes are socially desirable, but the abuses have often negated their noble intention. I believe EIS will face the same consequences if no robust implementation system is instituted.

Instead of EIS, there are other alternatives. The government can institute fairer wages, encourage savings and personal financial responsibility, manage cost of living and keeping the economy resilient and buoyant.

If we are not careful, EIS will turn out to be another subsidy programmes with unintended consequences. It is an extra cost of doing business but the benefits of which could be easily abused.

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