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Employment Insurance Scheme aims to get experienced Malaysians back to work
Senior employees granted new protection as country shifts focus of employment policy
Malaysia’s new Employment Insurance System (EIS) has been welcomed as a tool to help retain senior talent in organisations, as the government tries to encourage a more vibrant labour market.
The EIS Bill 2017, implemented by the country’s parliament, the Dewan Rakyat, on 26 October, seeks to provide retrenched workers with temporary financial assistance and appropriate training that will help them return to work.
The bill comes as Malaysia moves towards the status of a developed country, with the associated potential downside of significant job losses due to automation and corporate restructuring.
“This news will certainly provide a sense of security to the upper echelons of employees and help HR departments retain senior talent in an organisation,” said P Ganesan, vice president – human resources for business service organisation Aegis BPO Malaysia.
“While this will certainly affect hiring decisions in the future, it will also provide the necessary opportunity to forecast employee costs and provide for demand well in advance,” he added.
According to the Ministry of Human Resources, the EIS will benefit 6.5 million workers in the eligible age bracket of 40 to 50, in the event that they lose their job. Both employers and their workers will share monthly contributions to the scheme equally, with the amount capped at a maximum of MYR59.30 (US$14).
For employers, the ministry said the insurance system would increase productivity as employees will have undergone skills and re-training programmes, as well as reducing the pressure on them if there is a need to reduce costs, downsize operations or in the event of bankruptcy.
Saponti Baroowa, associate director, business intelligence with pan-Asian professional services firm Dezan Shira & Associates, said a national programme to train retrenched workers is a good idea as it will increase the potential for re-employment of such workers, particularly in the face of an increasing use of new technologies across various sectors.
“Malaysia’s aim of becoming a high-income nation by 2020 has led to a push towards the development of a skilled workforce and the associated need to ease workers into more productive industries,” said Baroowa.
“Schemes for reskilling and upskilling the existing workforce will become increasingly important to cushion and mitigate any negative effects on the country’s working population as the economy progresses up the value chain, while training and re-training will also allow unemployed workers to build on their current work experience and prevent their existing skills from deteriorating, and therefore increase their employability,” he added.
May Wah Chan, a director with Michael Page Malaysia, agreed that the EIS is good news for HR departments. If a company was going through a retrenchment exercise, it has the reassurance of support from the government to assist affected employees, she said.
“This makes the transition much easier for professionals as well and provides a new pool of immediately available talent to other prospective employers with recruitment needs,” she said.
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