This slide will explain about Employee Insurance Scheme (EIS) in Malaysia which have been implemented in 2017

1. The Employee Insurance
Scheme

2. What is Employee Insurance Scheme (EIS)
Provide financial aid to employees who have been retrenched and have
not found alternative employment.
Act as a “safety net” .
Coverage =mandatory /For all Malaysian working in the private sector
Qualification condition= loss of employment
=minimum 12 month contribution in 24 month
Funding = both the employers and employees
= required to contribute 0.25% from each party of the employees’
salaries to
=total 0.50% of total definition wages as practiced by SOCSO

3. Benefit structure = paid half of their last salary until they find a job
or for up to six months
=job matching/placement services and career
counselling
=retrained and reskilled people
Administrative = managed by Social Security Organization (Socso)
=supervised by Ministry of Human Resource
Targets to prevent unemployment and diversify risks during
labor market transition.
Some countries in Asia that have employment insurance
schemes also feature government contributions to these
schemes (Thailand – 0.25%, Taiwan – 0.1%, Vietnam – 1%).

4. When?
Planning papers for the scheme have already been approved by the
Economic Planning Unit.
Tabled at the parliamentary sitting in June 2017
Expected to be enforced from 1 January 2018

5. The Brightside of EIS
• Insurance scheme benefits both workers and employers.
• The Employment Insurance System (EIS), which is designed to help
workers and employers cope with a demanding labour market.
• “The scheme will benefit around 6.5 million local employees in the
private sector.”-Najib Razak
• The EIS is intended to act as a “safety net” for workers who have been
retrenched as a result of their employers being wound-up / becoming
insolvent.
• The EIS will therefore provide financial aid to employees who have
been retrenched and have not found alternative employment.

6. • Aside from financial assistance, employees looking for new jobs will
also be provided assistance with job search, career counselling and
job suitability.
• EIS will also provide a retraining programs or additional training to
upgrade their skills.
• The implementation of the scheme is expected to bring long-term
benefits to both employees and employers in the country.
• EIS will add to the efficiency of the labour market (in the country)
through a better system of matching supply and demand, and lead to
increased productivity and competitiveness of the industries.
• Similar schemes in other countries have shown that it can act to
stabilize the economy and help sustain economic activities in a
country, especially during times of economic crisis.

7. The Issues with EIS
• The EIS will come as an additional expense to both employers and
employees. Both employees and employers having to contribute
every year, the fund is no small sum for an employer. Money is cash
flow for a business. EIS become cost of doing business, just like the
contributions to the Employees Provident Fund and Socso.
• Not all private sector doing well, private companies are currently
experiencing financial problems and some companies are forced to
reduce workers. "If this scheme is implemented, it will certainly
increase operating costs and cause many companies to face
problems” (Malaysian Employers Federation)
• The scheme is unfair to employers and employees if implemented as
employees earn only 6% interest and the remaining 94% for insurance
costs.

8. • If the employee manage to retired, he would not get any fund from
the EIS.
• The Active Labour Market Policies portion of the EIS, which will
probably include job seeking, job matching, job placement, career
counselling and job training, upskilling and reskilling, overlapping the
functions of JobsMalaysia and The Institute for Labour Market
Information and Analysis, both of which are under the purview of the
Ministry of Human Resources.
• EIS funds can be misused as a retrenched worker may still work in this
sector and claim the EIS payment, if absence of effective monitoring
mechanisms.
• Unemployment rate will increase and eventually will become a
burden to government to solve the problem.