MEF: Three million risk job loss amid economic fallout from Covid-19

Datuk Shamsuddin Bardan

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By Peter Sibon

KUCHING, March 30: Some three million workers nationwide are facing the risk of retrenchment due to the economic downturn caused by Covid-19, if concrete assistance is not provided to employers.

Malaysian Employers’ Federation (MEF) executive director, Datuk Shamsuddin Bardan, said recommendations were made to Putrajaya but not included in the Prihatin economic stimulus package when it was announced by Prime Minister Tan Sri Muyhiddin Yassin last Friday (March 27).

“We did recommend to the government (the measures to soften the impact of the economic downturn faced by employers) so that it would be easier for us to continue to operate during this hard time. This include taxation repayment to be reviewed.

“What we suggested (among others) was, why not give direct assistance to the employers such as restructuring EPF contribution during this hard period by reducing the employers’ contribution from the current 12 per cent to 5 per cent.

“Unfortunately, this was not included in ‘Prihatin’ RM250 billion stimulus package,” he told DayakDaily in a phone interview today.

Shamsuddin said the government could emulate other countries, where governments gave employers subsidies to pay their employees ranging from 60 per cent in Singapore, 75 per cent in Canada and up to 80 per cent in the United Kingdom.

“Under Prihatin, the government is assisting employers only 20 per cent and the schemes are more in the forms of handouts to employees and not in the form of wages subsidies.

“In that sense, we feel that the scheme is not really trying to encourage employers to retain their employees,” he added.

He expressed worry that if the assistance was not attractive enough,  then the possibility of 2.4 million workers to be retrenched, as forecast by the Malaysia Institute of Economic Research (MIER), could become a reality.

“This is the kind of thing that we try to convince the authorities, whether there is any further assistance be given to employers to make it more attractive for them to retain their employees during this difficult period,” he continued.

Shamsuddin believed that retrenching employees would be the last resort employers would have to take to stay afloat, saying it would be a huge loss to any employers because when the hard time is over, they still need to re-employ new workers who would need to be retrained.

On another issue, he questioned whether employers are legally obliged to pay salaries throughout the four-week period of the Movement Control Act (MCO).

“This is a situation of force majeure, a frustration of contract, an event that is beyond the reasonable control of either employer or employee. In this kind of situation, either party has the right to nullify the contract,” he pointed out.

“As such, MEF is seeking to find win-win situation, whereby employers pay half-month wages during the CMO period,” he said.

Shamsuddin added that while some companies have introduced work from home policies, other businesses have completely shut operations over the MCO but still bear overhead costs such as wages and rent.

“If we are not careful and insist for employers to bear all the cost, a lot of retrenchment may happen,” he continued.

Samsuddin said MEF wished to maintain employment for as long as possible, beyond the four weeks of MCO and suggested that employees be given the option to apply for unpaid leave, or to take annual leave during the restriction movement order.

“In the situation that employees do not want to take annual or unpaid leave, and their employers do not wish to pay salaries during the MCO, the Employee Retention Programme (ERP) under the Employment Insurance System should come in, and pay on a pro-rated basis if the unpaid leave period is less than 30 days,” he suggested.

Shamsuddin was referring to a section in the first stimulus package announced on March 16, where a RM600 monthly financial assistance is provided between a period of one to six months for employees with monthly wages of RM4,000 and below who are forced to take unpaid leave beginning March 1.

MCO is enforced from March 18-31 and extended for another two weeks until April 14.

MEF has some 6,000 individual business members, including 20 industry associations, banks, plantations and insurance, where some three million workers are employed by its members. — DayakDaily