The Malaysian Employers Federation (MEF) said such a move would go a long way in helping companies prepare for tough times ahead, with the global and local economic outlook being gloomy.
“In hard times, the government has to consider some direct costs incurred by employers,” MEF executive director Shamsuddin Bardan was quoted as saying by the business paper.
Shamsuddin was referring to the employers’ allocation of 13% of the employee’s salary paid to the EPF for the benefit of their employees. This is paid over and above the salary to the employee.
Employees also make a contribution, paying a minimum of 8% of their salary to their EPF account. That amount is deducted directly from their monthly salary by the employer and submitted to the EPF.
In making the call, Shamsuddin also suggested that a reduction by 1% or 2% would help towards lowering the need to carry out layoffs over the next six months.
“The government may want to consider reducing the contribution rate to EPF by 1% or 2% for the time being. I am not saying this should be forever, but to retain employment, it is critical that employers are given assistance now,” he told The Edge.
Shamsuddin also asked Putrajaya to look into the contribution by employers to the Human Resource Development Fund (HRDF), stating that reducing it by half would help employers in these challenging times. All employers currently pay 1% of their total wage bill to the HRDF.
Another suggestion by Shamsuddin that may find favour with companies in Malaysia was to emulate the policy in Singapore, where employers are given incentives if they hire unemployed graduates and do not carry out any layoffs throughout the year.
“Such incentives are critical and will prepare employers for the economy to recover, as they are in a good position to reap benefits instead of undergoing the employment process again,” he was quoted as saying.
According to The Edge, the Singapore government had reportedly launched a Career Support Programme as a move to encourage employers to hire eligible job seekers for positions that pay at least S$4,000 (RM12,500) as a means to give such employees on-the-job training. The Singapore government will contribute 10%-40% of the salary, subject to specified caps.
Shamsuddin also revealed that 31,476 Malaysians were retrenched from January to September this year and he expects more layoffs by the end of the year end. He added that the number of layoffs for last year came to 44,000.
“In June, the total was around half of the 31,476. More and more employers are forced to retrench their workers due to the volatile market and the depreciating currency,” The Edge quoted him as saying.
He expected more retrenchments to come from the services, manufacturing, and oil and gas (O&G) sectors.