The government's proposal to set up an unemployment fund has raised concerns that Putrajaya is trying to generate income for itself.

However, PSM's Sungai Siput MP Dr Michael Jeyakumar Devaraj is taking a practical approach on the matter, saying the potential bad should not outweigh the good.

Jeyakumar said concerns that the Employment Insurance Fund would be mismanaged were realistic, as audit reports showed that other government funds have also been mismanaged.

"But not having the (unemployment) fund is not the answer.

"Start the fund, but we must continue our efforts to clean up on corruption," the lawmaker told Malaysiakini.

The unemployment fund is part of the Employment Insurance System Bill tabled by the government in Parliament yesterday.

Under the Bill, employers and employees will make monthly contributions to the fund, which will in turn provide workers with unemployment benefits should they meet certain conditions.

50,000 lose their jobs every year

Jeyakumar said that each year up to 50,000 people lose their jobs, one-third of whom get no compensation due to reasons such as companies going bankrupt.

Thus, he said, there was a need for the unemployment fund.

Asked whether the government should lower the minimum 12-month contribution for a worker to qualify for the benefits, Jeyakumar said that and other improvements can be made in the future.

"After the fund runs for a couple of years, they can see if its too stringent and if they can loosen the requirements.

"If you are the government, you wouldn't want to start a fund that can't pay for itself... It's an extra burden on government resources," he added.

The Sungai Siput MP does have more immediate concerns that he would raise during the Bill's debate.

One of the concerns, is the increasing difficulty in making unemployment claims for the second time onwards.

Under Section 32(5) of the bill, the number of contributions a worker has made prior to making a claim, shall not be counted for any subsequent claim requests.

For example, if someone happens to lose their jobs twice in two years, they can't make a second claim unless they have made 18 months of contributions after making the first claim.

Another concern Jeyakumar has, is why there is a provision allowing the Social Security Organisation (Socso) - which manages the fund - to appoint agents to collect contributions.

Jeyakumar said Socso had no problems collecting contributions for its own social security scheme, thus negating the need for private payment collectors.

"The concern is that the agents will become cronies who will want to take a cut (from the contributions)," he said.

The second reading of the Employment Insurance System Bill is scheduled to be held in this current Dewan Rakyat sitting.