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Malaysia Employee Insurance Scheme

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This slide will explain about Employee Insurance Scheme (EIS) in Malaysia which have been implemented in 2017

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The Employee Insurance Scheme
What is Employee Insurance Scheme (EIS) Provide financial aid to employees who have been retrenched and have not found alternative employment. Act as a safety net . Coverage =mandatory /For all Malaysian working in the private sector Qualification condition= loss of employment =minimum 12 month contribution in 24 month Funding = both the employers and employees = required to contribute 0.25% from each party of the employees salaries to =total 0.50% of total definition wages as practiced by SOCSO
Benefit structure = paid half of their last salary until they find a job or for up to six months =job matching/placement services and career counselling =retrained and reskilled people Administrative = managed by Social Security Organization (Socso) =supervised by Ministry of Human Resource Targets to prevent unemployment and diversify risks during labor market transition. Some countries in Asia that have employment insurance schemes also feature government contributions to these schemes (Thailand 0.25%, Taiwan 0.1%, Vietnam 1%).
When? Planning papers for the scheme have already been approved by the Economic Planning Unit. Tabled at the parliamentary sitting in June 2017 Expected to be enforced from 1 January 2018
The Brightside of EIS Insurance scheme benefits both workers and employers. The Employment Insurance System (EIS), which is designed to help workers and employers cope with a demanding labour market. The scheme will benefit around 6.5 million local employees in the private sector.-Najib Razak The EIS is intended to act as a safety net for workers who have been retrenched as a result of their employers being wound-up / becoming insolvent. The EIS will therefore provide financial aid to employees who have been retrenched and have not found alternative employment.
Aside from financial assistance, employees looking for new jobs will also be provided assistance with job search, career counselling and job suitability. EIS will also provide a retraining programs or additional training to upgrade their skills. The implementation of the scheme is expected to bring long-term benefits to both employees and employers in the country. EIS will add to the efficiency of the labour market (in the country) through a better system of matching supply and demand, and lead to increased productivity and competitiveness of the industries. Similar schemes in other countries have shown that it can act to stabilize the economy and help sustain economic activities in a country, especially during times of economic crisis.
The Issues with EIS The EIS will come as an additional expense to both employers and employees. Both employees and employers having to contribute every year, the fund is no small sum for an employer. Money is cash flow for a business. EIS become cost of doing business, just like the contributions to the Employees Provident Fund and Socso. Not all private sector doing well, private companies are currently experiencing financial problems and some companies are forced to reduce workers. "If this scheme is implemented, it will certainly increase operating costs and cause many companies to face problems (Malaysian Employers Federation) The scheme is unfair to employers and employees if implemented as employees earn only 6% interest and the remaining 94% for insurance costs.
If the employee manage to retired, he would not get any fund from the EIS. The Active Labour Market Policies portion of the EIS, which will probably include job seeking, job matching, job placement, career counselling and job training, upskilling and reskilling, overlapping the functions of JobsMalaysia and The Institute for Labour Market Information and Analysis, both of which are under the purview of the Ministry of Human Resources. EIS funds can be misused as a retrenched worker may still work in this sector and claim the EIS payment, if absence of effective monitoring mechanisms. Unemployment rate will increase and eventually will become a burden to government to solve the problem.

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Malaysia Employee Insurance Scheme

  • 2. What is Employee Insurance Scheme (EIS) Provide financial aid to employees who have been retrenched and have not found alternative employment. Act as a safety net . Coverage =mandatory /For all Malaysian working in the private sector Qualification condition= loss of employment =minimum 12 month contribution in 24 month Funding = both the employers and employees = required to contribute 0.25% from each party of the employees salaries to =total 0.50% of total definition wages as practiced by SOCSO
  • 3. Benefit structure = paid half of their last salary until they find a job or for up to six months =job matching/placement services and career counselling =retrained and reskilled people Administrative = managed by Social Security Organization (Socso) =supervised by Ministry of Human Resource Targets to prevent unemployment and diversify risks during labor market transition. Some countries in Asia that have employment insurance schemes also feature government contributions to these schemes (Thailand 0.25%, Taiwan 0.1%, Vietnam 1%).
  • 4. When? Planning papers for the scheme have already been approved by the Economic Planning Unit. Tabled at the parliamentary sitting in June 2017 Expected to be enforced from 1 January 2018
  • 5. The Brightside of EIS Insurance scheme benefits both workers and employers. The Employment Insurance System (EIS), which is designed to help workers and employers cope with a demanding labour market. The scheme will benefit around 6.5 million local employees in the private sector.-Najib Razak The EIS is intended to act as a safety net for workers who have been retrenched as a result of their employers being wound-up / becoming insolvent. The EIS will therefore provide financial aid to employees who have been retrenched and have not found alternative employment.
  • 6. Aside from financial assistance, employees looking for new jobs will also be provided assistance with job search, career counselling and job suitability. EIS will also provide a retraining programs or additional training to upgrade their skills. The implementation of the scheme is expected to bring long-term benefits to both employees and employers in the country. EIS will add to the efficiency of the labour market (in the country) through a better system of matching supply and demand, and lead to increased productivity and competitiveness of the industries. Similar schemes in other countries have shown that it can act to stabilize the economy and help sustain economic activities in a country, especially during times of economic crisis.
  • 7. The Issues with EIS The EIS will come as an additional expense to both employers and employees. Both employees and employers having to contribute every year, the fund is no small sum for an employer. Money is cash flow for a business. EIS become cost of doing business, just like the contributions to the Employees Provident Fund and Socso. Not all private sector doing well, private companies are currently experiencing financial problems and some companies are forced to reduce workers. "If this scheme is implemented, it will certainly increase operating costs and cause many companies to face problems (Malaysian Employers Federation) The scheme is unfair to employers and employees if implemented as employees earn only 6% interest and the remaining 94% for insurance costs.
  • 8. If the employee manage to retired, he would not get any fund from the EIS. The Active Labour Market Policies portion of the EIS, which will probably include job seeking, job matching, job placement, career counselling and job training, upskilling and reskilling, overlapping the functions of JobsMalaysia and The Institute for Labour Market Information and Analysis, both of which are under the purview of the Ministry of Human Resources. EIS funds can be misused as a retrenched worker may still work in this sector and claim the EIS payment, if absence of effective monitoring mechanisms. Unemployment rate will increase and eventually will become a burden to government to solve the problem.