Targeted wage subsidy programme needed to curb further retrenchments

MEF asking for the govt to extend the WSP to at least year-end and for the amount to be increased

by NUR HANANI AZMAN / pic by BLOOMBERG

A SPECIFIC scheme that offers financial assistance targeted at specific sectors is the best solution to replace the wage subsidy programme (WSP) in order to avoid more job cuts during the economic recovery period.

Pan Malaysia Bus Operators Association president Datuk Mohamad Ashfar Ali said the targeted WSP could be implemented similar to the government’s decision to introduce targeted extension for the moratorium on bank loans.

Mohamad Ashfar said such a scheme could save a lot of jobs in various sectors. He said the transportation business, especially express bus operators, is among the industries still experiencing the devastating financial effects of the Covid-19 pandemic due to severely low fare collection.

The government, on June 5, extended the WSP worth RM5 billion for another three months to promote employee retention and reduce layoffs. Applications for the extended WSP will close on Sept 30.

“Although bus operators are allowed to carry full capacity of passengers since June, we only recorded 30% of capacity during weekdays and maximum 50% on weekends.

“Some busses are not operating at all, especially for the Johor Baru-Singapore route. Some of them are even stranded in Singapore with flat batteries and tyres, as well as broken engines,” he told The Malaysian Reserve (TMR).

Mohamad Ashfar said since the Recovery Movement Control Order (RMCO) was announced, there has been a minimal increase in passengers using express buses as people are only travelling for urgent matters or for work.

“With a low capacity on top of a high operating cost including electricity and workers, we really hope the government could extend the WSP for a longer period.”

The earlier three-month programme under the Prihatin Rakyat economic stimulus package saved some 2.4 million jobs as announced on June 24.

The WSP is a financial aid paid to employers for every local employee earning RM4,000 and below for a period of three months, and each company can claim for up to 200 workers.

Malaysia Footwear Manufacturers Association president Rachel Foo said any relief is important for all sectors now as they are not experiencing the V-shaped rebound as expected.

She said the global pandemic is relentless and it has affected the export market, especially for non-essential items.

“Therefore, yes, the government should extend the WSP. Many manufacturers are not able to operate full force due to short orders. We see some increase in sales. However, the orders are still very far from the usual.

“With the tight cashflow that most manufacturers are facing, we will not be surprised if more (people) are retrenched from October onwards,” she told TMR.

She said the sales for footwear has picked up compared to during the MCO and Conditional MCO, but sales as reported by a majority of retailers have dropped around 30% to 50% compared to last year.

Malaysian Employers Federation (MEF) ED Datuk Shamsuddin Bardan said the WSP did assist in slowing down the rate of retrenchments.

He said one of the conditions attached to WSP is for employers not to retrench employees during the WSP period and three months after the scheme is implemented.

He said the MEF also suggested for the government to extend the WSP to at least the end of the year and for the amount to be increased.

“The current WSP is about 12% of the monthly wages bill in the formal private sector. Singapore had given up to 70% of wages subsidy, while the UK had given 80%.

“If it is not extended, we can see more retrenchment especially after December 2020. By that time, employers that received the WSP are no longer restricted from carrying out retrenchments,” told TMR.

Human Resources Minister Datuk Seri M Saravanan recently said the retrenchment figure could hit the one million mark by end-September.

The Malaysian Trades Union Congress secretary general J Solomon said the projection will become a reality if the WSP is not extended.

He said many employers are simply ready to use any excuse to retrench workers and ending the WSP will give them the fodder to do exactly that. Without the extension, Solomon said workers are even more vulnerable to unscrupulous employers.

“To ensure that employers would play ball and provide job security, we urge the government to not only extend the WSP, but also implement the Emergency Employment Regulations (EER) which prohibit employers from retrenching workers for a specific period of time.

“This will ensure job security and preserve the workers’ livelihood,” he told TMR.

Solomon said many employers are expected to take the easy way out by retrenching more workers once the WSP runs it course.

“As the domestic and global economies are still struggling and a vaccine is yet on the horizon, the government should consider extending the WSP for another six months on provision that it introduces EER to safeguard jobs and ensure there are no more retrenchments.

“Periodic checks should also be done on companies benefitting from the WSP to ensure there is no exploitation of employees.”