M’sia: Current wage subsidies insufficient, present govt should retain [email protected] initiative, says former youth minister

KUALA LUMPUR, MALAYSIA — More needs to be done beyond providing wage subsidies to tackle the issue of youth unemployment, and such is why the Perikatan Nasional government should retain the [email protected] initiative, said Muar Member of Parliament Syed Saddiq Abdul Rahman.

The former Youth and Sports Minister said that while the existing wage subsidy programmes introduced by the present government through the National Economic Recovery Programme (PENJANA) is a positive move, such subsidies will only serve to “maintain existing jobs”.

The subsidies, he said, covers “an average of around 2.6 per cent of salaries” compared to neighbouring Singapore “where wage subsidies may reach up to 75 per cent” under the Jobs Support Scheme and furlough schemes in the United Kingdom where wage subsidies may reach up to 80 per cent during the COVID-19 pandemic.

“The real question is, how do we create new jobs in the wake of widespread graduate unemployment and to prevent them from being trapped “in a vicious cycle of unemployment”?” Syed Saddiq questioned.

Highlighting that around 826,000 Malaysians are unemployed as of May, he cited findings by the Malaysian Institute of Economic Research and Malaysian Employers Federation, which estimated that the unemployment figure in Malaysia may go up to 2 million by the first quarter of next year.

Such an “alarming figure”, said Syed Saddiq, will thus “require extraordinary intervention from the government”.

Consequently, he urged the PN government to proceed with the programme.

[email protected] was introduced by the Pakatan Harapan administration — during which Syed Saddiq held the portfolio of youth minister — last October as a part of Malaysia’s Budget 2020.

It was originally slated to begin in the second quarter of this year under the execution of the Ministry of Finance through the Employer’s Provident Fund (EPF).

The multi-ministry initiative — worth RM6.5 billion — targeted the creation of 350,000 jobs in the span of five years.

Four components make up [email protected]: [email protected], [email protected], [email protected] and [email protected]

[email protected] aims to provide incentives such as a monthly top-up of RM500 for two years to companies hiring graduates that have been unemployed for over 12 months.

[email protected] aims to encourage women to return to the workforce by giving them RM500 per month for two years and employers up to RM300 per month for two years for hiring them.

Under the scheme, returning women workers may also be eligible for a four-year extension — until 2023 — of the current income tax exemption.

[email protected] aims to encourage the hiring of Malaysians. Citizens hired to replace migrant workers may receive either RM350 or RM500 per month for two years depending on their sector, while their employers may receive a hiring incentive of up to RM250 per month for the same period.

[email protected] was designed to supplement existing allowance for trainees on apprenticeships at RM100 per month.

Then-Finance Minister Lim Guan Eng in a speech at the International Social Well-being Conference said last November that “wages and hiring incentives under [email protected] will be credited directly into the individuals’ accounts, offsetting the statutory contributions by employers and employees”.

“Any excess amount of the wage incentive will be credited into a special account created by the EPF that allows for flexible withdrawal, in any amount, whenever needed,” he added.

In his speech yesterday, Syed Saddiq also urged the government to set pre-requisites in hiring workers for government contracts such as establishing a quota for local workers and setting a higher minimum wage threshold for companies securing such contracts.

“Under Malaysia’s previous administration, we were able to raise the minimum wage from RM900 to RM1,200,” he said.

While such an amount remains insufficient in his view, Syed Saddiq said that the public sector can nonetheless set an example to the private sector “by raising the minimum wage for government contracts”.

Doing so, he said, will “prove that the Government is committed to creating new jobs and that workers who are paid to do them will receive dignified salaries”.

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