Press Statement by Charles Santiago in Klang on Saturday, 2^nd May 2009:

Government should set-up workers retrenchment fund urgently

In conjunction with Labour Day, I call upon the Human Resources Ministry to immediately set-up the long-mooted workers’ retrenchment fund. The government should not wait for the next financial and economic crisis to come around before it implements the overdue plan.

The ministry’s decision to wait for the right cue from the International Labour Organisation (ILO) to issue its recommendations and deliberate on the proposed fund before deciding on whether or not to go ahead with the idea is nonsensical.

Malaysia’s 11 million workers simply cannot wait that long. Last Febuary the ministry reported that 54,977 workers had lost their jobs since October after the first waves of the global financial and economic crisis hit Malaysia's shores. It also predicted that at least 100,000 will lose their jobs by the end of this year.

The Malaysian Employers Federation, meanwhile, had projected that between 200,000 to 400,000 jobs were under threat, with others projecting an unemployment rate of 5% before the end of 2009.

In the worst-case-scenario, there could be anywhere between 600,000 to 1 million jobless workers in Malaysia due to the unprecedented meltdown of economies all over the world.

A retrenchment fund was mooted more than ten years ago in May 1998 by the Malaysian Trades Union Congress (MTUC) following the Asian financial crisis which saw about 80,000 workers losing their jobs.

In line with the proposal (which can be seen here), every employer and worker who contribute to the Social Security Organisation (Socso) would be made to contribute RM1 each towards the fund.

According to simple calculations, Socso's 5.1 million members would have a contingency fund of RM10.2 million within a month and RM122 million at the end of one year, from which allocations could be made available to retrenched workers. The fund could be a source of support available to workers until they regained employment.

It would be a mistake for the government to ignore this proposal, as it did ten years ago, given that the scale of this present crisis has no precedent in history.

Spain last month, for example, recorded that 4 million people were unemployed. This attributes to 17.4% of the country's workforce. Some authorities are projecting this will rise to 23%. In the US, meanwhile, the recession has cost more than 5 million jobs since late 2007.

It is clear that the global economic downturn will get a lot worse before getting better.

As we celebrate Labour Day, I once again urge the government and Human Resources Ministry to set up the retrenchment fund before this economic crisis, which started as a credit crunch that snowballed into a financial crisis, turns into a humanitarian crisis.

* Charles Santiago, Selangor DAP Vice Chairman & MP for Klang