The alternatives proposed by MEF were not feasible, PSM Secretary-General A Sivarajan said in an interview with FMT.
Last week, reacting negatively to PSM’s proposals for the establishment of a retrenchment fund and an employment insurance scheme, MEF Executive Director Shamsuddin Bardan suggested instead that a third Employees Provident Fund (EPF) account be set up for deductions from employees’ salaries until it amounts to one month’s salary. On top of this, he said, there should be established another account for each worker, into which the government and his employer could each contribute one month of his salary.
Sivarajan said it would be risky to dip into the EPF. “EPF is meant to be savings when a person retires,” he said. “It should be kept that way.”
On companies setting aside the equivalent of one month’s pay, Sivarajan pointed out that the reason companies weren’t paying reparations to retrenched workers in the first place – as required by the law – was that they were bankrupt and did not have the money to do so.
“Setting aside even more money is not going to change this scenario. When companies are bankrupt, they have no access to their assets anyway.”
Sivarajan said PSM’s concept of a retrenchment fund was more workable as it would operate like the accident benefits from the Social Security Organisation (Socso).
He pointed out that employers, while contributing to Socso, also took steps to ensure safety at the workplace.
“A similar concept would apply to a retrenchment fund,” he said. “It is about having a collective fund and collective responsibility.”
He said PSM was urging the government to set up the proposed fund under Socso so that there would be no conflict of interest.
He acknowledged that more research was needed before setting up an employment insurance scheme, but he said the retrenchment fund would be only a small part of the scheme and shouldn’t be “too hard” to set up.
“We hope that by the time the Prime Minister tables the budget in October, there will at least be something to show that this retrenchment fund has been considered,” he said.
Last month, Human Resources Minister Richard Riot said more research was required before any employment insurance scheme could be implemented.
PSM is gathering 20,000 signatures nationwide for a petition to pressure the government to hasten a bill on the insurance scheme. PSM Treasurer Soh Sook Hwa said the signatures would be sent directly to the Human Resources Ministry.
According to statistics from the ministry, 25,917 workers were retrenched in 2014. The number increased to 38,499 in 2015.
Statistics also show that one out of every three retrenched employees had not received reparations.