The Federation of Malaysian Manufacturers (FMM) has welcomed the deferment of the Employment Insurance System (EIS) Bill to the next Parliament session. 

"The decision by the government to initiate further consultation on the model involving four ministers is definitely a step in the right direction," FMM said in a statement today. 

The cabinet has postponed the passage of the EIS last Friday, to engage with stakeholders. 

FMM had earlier voiced objections to the bill, which is intended to help retrenched workers, saying there was no proper and open consultation with stakeholders during the development of the bill. 

The proposed system put forward is also not in line with the original purpose as informed to employers and FMM in early engagements, as it was bigger than necessary and puts an unnecessary burden on both employers and employees, they said. 

“FMM hopes that in the upcoming consultations, full details on the model, including statistics in support of the government’s computations, as well as the proposed regulations and orders, which would accompany the promulgation of the Act would be openly shared.

“Sufficient notice must also be given for these meetings to ensure that each stakeholder group is well represented,” they said.

After reviewing the Bill, FMM said they have identified several issues which should be discussed with the government.

These include:

  • Excluded categories of workers, which should be expanded to exclude those on fixed term contract and project basis or for a particular task, and foreign workers.
  • Contribution rate under Parts I, II and II of the Second Schedule as well as a review of rates, as FMM maintained that the contribution rate proposed in the Bill is too high.
  • Definition and determination of loss of employment
  • Reduced income allowance eligibility conditions
  • Composition of the Employment Insurance Committee which should be more balanced with an equal number of representatives of employees, employers and the government
  • Need for a separate EIS board to ensure that management of EIS is at arm’s length and independent of Socso.

The EIS seeks to provide those who have lost their source of income, unemployment benefits for three to six months.

The bill proposes that those who are out of work, including those who resigned due to specific reasons, be given a job search allowance, as well as entitled to a training allowance.

Those working two jobs or more are also entitled to a reduced income allowance.