Work towards an insurance scheme to protect all

WHETHER we call it employment insurance or unemployment insurance, Malaysians will have plenty to talk about if the Government decides to go ahead with the introduction of an insurance scheme to help both workers and employers to cope with a more demanding labour market.

In his Labour Day speech, Prime Minister Datuk Seri Najib Tun Razak said the Employment Insurance Scheme was being considered as a way to better protect employees as well as to make it easier for employers to run businesses.

He added that the scheme would lend laid-off workers a hand with their expenses until they were hired again. It would also include employment counselling to improve the workers’ chances of landing new jobs, and training programmes that would allow employers to improve the skills of their workers and subsequently pay them accordingly.

The scheme is also designed to support employers in dealing with technological and structural changes, while reducing the likelihood of bankruptcy or downsizing.

Najib said the details of the scheme would be announced after an engagement process with all stakeholders, adding that “this will be a shared responsibility between employers and workers”.

Sunday was not the first time that the Prime Minister spoke about employment insurance in a national address.

In his Budget 2015 speech in October 2014, Najib listed the implementation of an Employment Insurance System as one of several proposed initiatives to safeguard the welfare of workers. He said this was aimed at aiding retrenched workers by giving temporary financial assistance as well as providing opportunities for re-skilling and up-skilling.

It is, in fact, an idea that has been floating around for a while.

The National Economic Advisory Council’s second report on the New Economic Model, published in December 2010, recommended the introduction of unemployment insurance to enhance the labour safety net in tandem with the bold labour reforms that the council has mooted.

The approach here is to have both employers and employees funding the unemployment insurance, which will include provisions for retraining, job search-placement and relocation.

“An appropriate labour safety net would include an unemployment insurance scheme supported by up-skilling and retraining programmes, and upgraded employment services.

Unemployment insurance would alleviate reliance on retrenchment benefits to cover income loss from a job loss,” said the council.

It appears that the long journey from proposal to reality may be ending soon. But there is still a lot to do to smoothen the path to implementation.

For one thing, the business community is worried about the additional costs of such a scheme and how it may affect the country’s productivity. There is also some concern that the scheme will add another layer of bureaucracy and will fall short of its objectives.

It is clear that the scheme will have an impact on businesses, the workforce, society and the economy. To have a chance of working well, it needs broad acceptance. And that can come only when people understand it well and appreciate the potential good it will bring.

The Government must be ready to field all questions and to provide adequate information on the scheme. We should know what has been learnt from the experiences of other countries that already have employment insurance.

To inspire confidence, the scheme has to be transparent and well-governed from the start.

A safety net is only as good as our faith in its reliability.