Parti Sosialis Malaysia (PSM) suggests that a low-interest loan scheme be extended to low-income workers, similar to the one given to civil servants.

jerit habitat day forum 011007 mohanarani This could help the workers cope with the present economic crisis, and prevent them from turning to cutthroat loan-sharks.

PSM deputy secretary-general R Mohana Rani said the government has a "social duty" to intervene on behalf of "exploited" low-income earners.

Mohana reasoned that the government has already allocated billions of ringgit to rescue corporate players, who were few when compared to the millions of struggling low-wage earners.

She pointed out that the downturn in the nation's economy has seen many workers being either laid off or seeing reductions in overtime or workdays.

With their now-reduced income, these workers were forced to borrow to pay outstanding loans. Due to restrictive terms from banks, workers had to borrow from money lenders instead and were charged up to 10 percent interest a month.

Caught in debt traps

According to her an average factory worker who works for eight hours earns about RM400 monthly. To make ends meet, the worker would work overtime and earn around RM1,000 a month.

factory workers sweatshops 090107 shoes Those with additional income from overtime work often venture into buying houses or other property. But when overtime is reduced, their wages plummet and they are faced with economic hardship.

"As income remains low, they default on loans and resort to high interest loans that result in them falling deeper and deeper into debt, " Mohana said.

PSM offered two other suggestions to ease the financial woes of low-income earners.

1) A moratorium on bank loans until the financial situation of the borrower improves.

2) Greater flexibility on loan restructuring as regards to Islamic banking loans.

Mohana said on Dec 2, a delegation of PSM members met Bank Negara Malaysia officials and forwarded the three proposals for consideration.