The Association of Small and Medium Enterprises of Malaysia or Samenta has expressed its views on the call by quarters to increase the EPF contribution by employers to 20% from the current 11%, its Chairman Datuk Willian Ng said an increase in employers’ EPF contribution is concerning as at this juncture of the country’s economic recovery is not only counter-productive but will do more harm than help to Malaysians.
He rather urged the Government to reject this opportunistic demand by that fringe worker’s group, and instead focus on creating higher-value jobs for Malaysians and helping Malaysian businesses and workers to be more productive. While the economy has roughly recovered to 2019 level, the association feels SMEs continue to trail behind larger firms in the share of growth. The latest available data for 2021, for example, showed that SMEs only grew by 1 percent versus 4.4 percent for larger firms. This uneven recovery is further compounded by rising costs, which hit our SMEs severely
as they do consumers in general.
William added that SMEs have had to endure two rounds of increments in minimum wages since 2020, despite Covid-19, a severe dip in our GDP, and a drop in labour productivity. The industry was also forced to adopt higher employee benefits, including longer maternity leaves and a lower threshold for overtime pay. SMEs are still waiting for an answer from the government to our plea for these increased costs to be subsidised as practised in Singapore and the UK.
When the government pleaded to SMEs to keep employees employed despite the pandemic, the industry rose to the challenge. As a result, the number of jobs dropped by only 2.5 percent between early 2020 to mid-2021, despite our GDP shrinking by 5.6 percent, and between 7 to 12 percent businesses shutting down in 2020. Many SMEs had to dip into their reserves and their children’s education fund, and sell properties and other assets, to try to keep as many Malaysians employed as possible.
Even as efforts were met with rounds of forced costs increment, the sector stomached it. Too many SMEs, that’s the price the industry has to pay to help Malaysia recover.
There are some other groups that have instead called for a ‘stepped’ increase in (employers’) EPF contribution. Samenta also rejects this call. William added a responsible government cannot keep being held hostage by opportunistic groups, and businesses must not partake in this ‘give and take’ approach every time a non-sensical proposal is fielded.
He added margins are at its lowest point in recent history; SMEs have done their part in helping Malaysia recover; and there is simply no more money to give. The powers that be must instead increase the income of Malaysians by creating more high-value industries and jobs, encouraging Malaysians to save more, and protecting SMEs at all costs so that Malaysian jobs and livelihoods are protected.
