In order to prevent people from being laid off, the government offered to subsidise a portion of salaries that were paid to support certain companies and for a certain period of time.
In other words, the government decided to help by co-paying salaries, to reduce the burden of expenditure for individual companies and employers, especially in the retail and tourism sector.
As such, the implementation of the Wage Subsidy Programme with an allocation of RM18 billion through the Social Security Organisation (SOCSO) was successful in helping 2.9 million employees in Malaysia from losing their jobs and helped over 300,000 businesses to date, according to M Saravanan, Human Resource Minister.
However, it was reported that quite a number of companies took the subsidies, meant to retain workers and still laid them off. Despite the number of wage subsidies given, the Human Resource Ministry reported that in July this year, the number of unemployed individuals had increased by 9,500 to 778,200 people, according to Bernama.
Additionally, the Labour Force Survey Report, issued by the Department of Statistics for the second quarter of this year, stated that the country’s unemployment rate was 4.8% or 768,700 people.
Permatang Pauh Member of Parliament Nurul Izzah Anwar tells Business Today that whilst coverage has increased, decision-makers must remain cognisant of key weaknesses to the current voluntary schemes.
Cradle To Grave
“The loopholes in these schemes could create perverse incentives for employers to retain the status of self-employability for its dependent staffers, and end up more onerous on those who are in risky working conditions and more likely to contribute – thereby narrowing the risks further,” she comments in a chat with Business Today.
She adds that such glaring weaknesses of social protection should push for a revamp of the existing system – and adopt a more cradle to grave approach in providing social security.
“The existing disparity of wages between those at the top and the bottom should highlight the fact that our country can only recover if workers are protected.”
Currently, the wage gap in Malaysia stands at 148 times higher for a CEO versus our lowest-paid worker.
“The government must take action to provide for a sufficiently meaningful safety net especially in the wake of its regrettable decision to not impose a windfall tax”
She says that it is important to note that the disbursement of aid to Bantuan Kanak-Kanak – under the Women’s Ministry, merely benefited only 1 percent of the total in households in 2020. She says that less than 4 percent of old aged individuals aged 60 and above, with the poverty line being used at RM980 per household despite it having been revised in 2019 to RM2280.
“So the question remains – are we really targeting those in need ?” she asks.
Meanwhile, in a talk recently about the 12 Malaysian Plan, Dr Muhammed Abdul Khalid, MD of DM Analytics, urged the government to see that wage subsidy should not stop because Malaysia has not recovered, and that the nation is still recovering.
