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Malaysia to shelve unemployment insurance scheme for now

Publication Date : 12-06-2012


The unemployment insurance scheme will be shelved for now, National Economic Council member Dr Chua Soi Lek said yesterday.

Prime Minister Najib Tun Razak directed International Trade and Industry Minister Mustapa Mohamed and Human Resources Minister Dr S. Subramaniam to shelve the scheme at a council meeting yesterday, said Dr Chua, who is also MCA president.

“I stressed during the meeting that the government should not implement any new plans that will burden the business sector, especially small-and-medium enterprises, before the implementation of the minimum wage system because they may not be able to survive due to the additional financial stress,” said Dr Chua in a statement.

The unemployment insurance scheme was mooted for the first time by MTUC during the economic crisis in 1998 to provide a safety net for workers when companies closed without providing retrenchment benefits.

Shortly after, the cabinet gave the approval to the human resources ministry to come up with a proposal for a workers' retrenchment fund.

The proposal was shelved in 1999 when the economy recovered despite calls by the MTUC to introduce the fund.

In December 2010, Najib announced the National Economic Action Council's recommendation to enhance the social safety net for employees through an unemployment insurance scheme as part of the New Economic Model.

However, the proposal met with resistance from small-and-medium businesses over the costs involved.

Dr Chua said the insurance scheme required further deliberation - not just to avoid an increased financial burden on businesses, but to ensure that no other issues would arise during implementation.

He also suggested that details on the insurance scheme should be made public by the relevant authorities to respond to stakeholders' doubts.


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