Geoffrey Williams, a professor at Malaysian University of Science and Technology, said the reforms are essential and must begin immediately to balance social assistance, social insurance and to create meaningful well-paid work as the foundation.
It is the best way to create an environment in which people get meaningful, well-paid, and predictable sources of income, he said.
“Unemployment support should be limited to providing an incentive to encourage people to find work. It must be at a humane level but it is not intended to replace income from employment,” he told FMT.
The social welfare system must also cover sickness, return to work assistance, medical care and long-term care, employment injury insurance, invalidity benefits, support for people in old age, family support and survivor support.
He said the Covid-19 crisis had shown a need for a system that provides help at the level that a family or individual needs, in the form they need it, and when they need it.
“It must encourage active engagement, empowerment and employment rather than dependence,” he added.
He suggested that Malaysia look into a universal basic income, with income-related savings during working life from employees, employers and the government.
It must encourage saving early, flexibility for incomplete careers or gig-economy jobs and daily wage earners to maintain adequate savings, he added.
Rehiring schemes to avoid abrupt retirement and to ease the transition to a smoother retirement should also be encouraged, he said.
Support for old people should involve pensions for those without sufficient cover, Williams said. There should also be options for part-time work or to realise income from housing and financial assets.
The focus should be on quality of life not just basic survival income or handouts. “We must never resort to food parcels again. It must be equitable, humane, respectful and non-judgemental.”
He said resorting to food parcels was a sign of the collapse of the social welfare system. People were forced into extremely short-term crisis responses without root causes being tackled.
As for taxes to support the reforms, Williams felt it would be better to pay tax on income when a person has it than to receive no social support during troubled times or at old age for not paying enough tax.
“Malaysia doesn’t need to follow lazy tax-based examples from overseas. New options can be developed with input from employees, employers, government and investment funds,” he said.
Even a new national wakf or endowment fund could be created as a strong welfare system can underpin economic growth and development if it is well designed.
Goods and Services Tax (GST) could also be part of the solution but there is no single option and must be followed with portfolio funding including from individuals, employers, government and GLICs and investment funds.
Savings for welfare funds could provide investment for economic and social development. “It isn’t a simple trade-off but it can be a win-win solution if it is properly managed.”