The termination of the Socso’s Wage Subsidy Programme (PSU) is a mistake with severe implications including possibly plunging Malaysia into a period of mass unemployment.
Socso in a previous statement said the PSU aims to support affected businesses by the economic impact of the COVID-19 crisis as well as prevent workers from losing their jobs and source of income. If that is the case, why are they now saying that the termination of the PSU will not contribute to an increase in layoffs or unemployment rate?
In fact as a result of terminating this scheme, we also face deep economic and social problems. We need this scheme more than ever before and it is unusual for a government to announce that this will be terminated, unless our economic situation has drastically improved.
PSU served as an incentive for businesses to keep paying staff but without this program, more will consider shutting their businesses, hence laying off more workers.
It was reported that as of December 31, 2020, over 3.7 million employees and 428,516 employers have benefited from both the programmes. Socso claimed a survey involving 469 companies receiving the PSU indicated only 15 percent of the respondents plan to reduce their employees. This survey only represents 0.1% of the total employers.
So which companies exactly took part in a survey that would be used to end such a crucial subsidy to keep companies paying their employees? Can we have more transparency and discussions with stakeholders (employers, Unions, NGOs as well as Opposition MPs) about this survey, to get our input before a final decision is made on this matter?
Do not forget that the Finance Minister Tengku Datuk Seri Zafrul Tengku Abdul Aziz once touted that the wage subsidy programme had saved 2.4 million jobs.
To end the scheme now would mean the effort to save businesses would have been in vain.
We need to assist these impacted companies back into the path of profit and growth and the one way to do that is to save jobs.
How has that changed when Covid-19 cases are rising? SOPs are still weak with flip-flop decisions still being made and the nation still being under Movement Control Order’s (MCO) and state of emergency.
There is a very likely possibility that this will cause more employers to go bust or close down their companies.
It must also be remembered that Malaysia does not have a dole payment where the unemployed can claim allowances. To make matters worse, only Malaysians that are contributing to Socso can get this benefit. The informal sector and Gig Economy workers do not get any benefits.
An all-inclusive system should be introduced. Many countries have implemented wage subsidies measures, which the Malaysian government can refer to, here are a few;
- The United States implemented the Employee Retention Credit under the CARES Act that encourages businesses to keep employees on their payroll. The refundable tax credit is 50% of up to $10,000 in wages paid by an eligible employer whose business has been financially impacted by the Pandemic.
- The Australian JobKeeper Payment is a scheme to support businesses and not-for-profit organisations significantly affected by COVID-19, to help keep more Australians in jobs.
- The Singapore Government has announced further support measures to assist employers with job retention and job creation and enables the government to co-fund between 25 to 75 percent on the first S$4,600 (US$3,360) of monthly wages for every local worker.
- UK’s furlough scheme, which pays the wages of workers who would otherwise be laid off due to the coronavirus pandemic, has held down the headline unemployment rate. Britain’s most influential business groups and the trade union movements are now pressuring the government to extend the scheme until year end.
This is the time the Government must listen to the people and understand the workers plight. Unemployment is staring at the workers. Look at the situation in other countries and how caring the Government is to the workers. Many workers will be unemployed (both the formal and informal sectors) and have difficulty to ensure food on the table if the wage subsidy programme is withdrawn.
The Perikatan Nasional government, mainly the Human Resources Ministry should reconsider the grave impact of termination of the Socso’s Wage Subsidy Programme and the dependency the majority of impacted businesses have on the program.