IN the United States, the Covid-19 pandemic has made more than 42 million people jobless. Malaysia too is not spared.
Fortunately, the pandemic comes at a time when Malaysia has established a more solid institutional framework to deal with economic uncertainty, particularly in protecting the labour market and employment.
It might be a different story if the country's employment market faced this kind of shock a decade ago. This was evidently apparent in the aftermath of 2008 global financial crisis, where more than a hundred thousand workers had lost their jobs.
Consequently, in 2017, the government introduced the Employment Insurance System (EIS) to help workers with loss of employment by providing immediate financial and job search assistance, managed by the Social Security Organisation (Socso), an agency under the Human Resources Ministry.
Barely three years later, the EIS is at the frontline of the government's efforts to alleviate the impact of Covid-19 on the labour market.
In 2018, EIS received 23,697 claims for loss of employment (LOE). The following year saw LOE claims reach 40,084. As of Aug 17 this year, Socso had processed 73,141 LOE claims, more than two preceding years combined.
LOE is one of the economic barometers used to measure the economic health of the country. As bad as it sounds, the situation could have been much worse, had the government not intervened with unorthodox solutions.
To protect employment, the government introduced the Wage Subsidy Programme (WSP) to assist employers who are economically affected by the pandemic.
The programme has a two-pronged objective, namely making sure employers are able to continue operating and preventing workers from losing their jobs.
For this, the government allocated RM19.1 billion to Socso to administer it. Malaysians earning less than RM4,000 a month are eligible with the amount depending on the size of the company's workforce.
The subsidy is provided for six months for each worker. For the first three months, companies that employ more than 200 workers will receive RM600 per retained worker and those with between 76 and 200 employees will get RM800 per employee. Companies with 75 employees and less — which constitutes the majority of employers — will get RM1,200 per worker.
For the next three months, the amount of subsidy is a flat rate of RM600 per worker regardless of the workforce size.
Since its implementation in April this year (up to Aug 17), WSP has benefited 329,340 employers and 2.7 million employees. On top of that, 73,141 employees who lost their jobs are still eligible to claim EIS benefits.
The pandemic has illustrated the need to have a dynamic labour market institution such as the EIS to ensure a robust employment environment, especially during a crisis.
The question is how to ensure the workforce is ever-ready to face global crises in the future?
The EIS should protect employment, not merely help a worker when loss of employment occurs. The Prihatin Rakyat Economic Stimulus Package (Prihatin) and the Penjana Economic Recovery Plan (Penjana) initiatives such as the WSP and Hiring Incentive are one-off programmes implemented by the government to address employment issues.
We cannot expect to institute these programmes for a one-time crisis, over and over again. Rather, they should be a permanent feature of our economic policy. Therefore, a legal framework to initiate such programme should be put in place.
Socso is of the view that such a programme like WSP should be made permanent and incorporated in the Employment Insurance System Act 2017. We cannot rely solely on the government financing when facing similar economic shock in the future.
Extending the role of the EIS beyond the job matching and insurance benefits is critical, particularly with respect to the evaluation and monitoring labour market policies and programmes.
One of the challenges in labour market policy analysis is lack of real-time employment data, which currently is fragmented with low degree of coordination and integration.
Evidence points to the importance of integrating the broad range of employment data into a one-stop-centre to bridge the gap between labour, education and economic sectors which currently is non-existent. Socso welcomes the government's decision to make MYFutureJobs, as the central platform for national employment services.
As we are recovering, the importance of risk-pooling and resources-sharing between employers and employees — that underlines the EIS implementation — cannot be emphasised enough.
The author is Chief, Employment Insurance System Officer, Social Security Organisation (Socso)
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times