Teresa moots lower EPF contributions for employers of migrant workers

PARLIAMENT | A backbencher debating the Supply Bill 2025 has proposed an alternative figure for the implementation of mandatory employers and migrant workers’ contributions to the Employee Provident Fund (EPF) next year.

Teresa Kok (Harapan-Seputeh) said the government should consider significantly reducing contributions from employers of migrant workers, taking into account increased hiring costs with the new minimum wage of RM1,700 from next year.

“What I would like to propose, is employers contribute 1.5 percent, while a migrant worker contributes 10 percent,” she said in the Dewan Rakyat.

“This means, if a migrant worker is paid a minimum wage of RM1,700, the 1.5 percent employer’s contribution amounts to RM25.50, while the worker contributes RM170.

“Therefore, total EPF contributions (for one migrant worker) will amount to RM195.50, almost RM200 which is equal to the increase in minimum wage next year,” she said.

The employer’s contribution rate is set at 13 percent while employees contribute 10 percent of their basic pay.

At the present rate, Kok calculated that an employer’s cost to hire one migrant worker will increase by at least RM421, from the new minimum wage and EPF contributions.

“In my view, payment of EPF contributions for migrant workers will prevent incidents of ‘runaways’ from employers, as well as attempts by syndicates to ‘kidnap’ new workers who arrived in Malaysia.

“Mandatory migrant workers EPF contributions will also help them to save, and they can use the money to fund their return home once their contracts here have ended,” she said.

When tabling Budget 2025 at the Dewan Rakyat last Friday, Prime Minister Anwar Ibrahim announced that the government is looking into getting migrant workers to contribute to the private sector retirement fund.

At least two groups representing industries highly reliant on migrant workers - the Federation of Malaysian Manufacturers and Master Builders’ Association - have since urged the government to delay the proposal.

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