Employers Urge Gov't to Extend Wage Subsidy Programme Until December

Employers are asking the government to extend applications for the Wage Subsidy Programme (WSP) to the end of this year to spare employees from losing their jobs and help them maintain business operations.

“It really makes sense to inject more money into the WSP and to extend the application to the end of the year.

“Hopefully by that time, the situation will be better and employers need not retrench their staff,” Malaysian Employers Federation executive director Datuk Shamsuddin Bardan said.

“Although the WSP payout is not that big, it is useful in helping employers keep their workers.”

Applications for the WSP will end on Sept 30. The WSP is financial aid given to businesses for every local worker earning RM4,000 and below for a period of three months and each company can claim for up to 200 workers. The amount of subsidy provided depends on the size of the workforce in the organisation. 

Shamsuddin said companies could be more financially strained after September as it would also see the conclusion of the six-month Human Resources Development Fund (HRDF) levy exemption for its registered members.

“With these initiatives timed to end in September, the cost increase for employers will be great come October,” he said.

He was worried about the circumstances when the WSP finishes since “employers may not even have financially recovered by that time as many are still struggling due to the weak local market and stricter consumer spending”.

Moreover, he said the end of the year could see a rise in unemployment with the additional yearly arrival of 500,000 people into the labour market.

“If the trend continues, the unemployment figure may even go to double-digit; it was already at 5% in April,” he said. Shamsuddin said the government should rethink their decision to suspend the HRDF contribution past September and also try to reduce the mandatory employer Employees Provident Fund (EPF) contributions.

“Consider reducing the employers’ EPF contribution to 5% from the current mandatory minimum of 12% so that the private sector is given better cash flow injection and they can sustain themselves without retrenching people,” he said.

The SME Association of Malaysia president Datuk Michael Kang also urged the government to consider extending the WSP applications until the end of 2020 as many small and medium enterprises (SMEs) needed it to pay staff wages.

“Many SMEs apply for the programme because they are facing cash flow problems or they may have to otherwise retrench their staff.

“Plus, when the loan moratorium period ends in September, it will be worse for SMEs because people will have less spending power. Even now, sales have not picked up 100% yet,” he said. He stated that SMEs were facing challenges and would need a loan extension after September.

Kang said government intervention in granting an extension of the loan moratorium would be beneficial as banks might not want to give extensions on their own accord. On March 25, Bank Negara declared that banking institutions would offer a suspension of all loan and financing repayments for six months, starting April 1.

It was part of the government’s actions in helping individuals, SMEs and corporations to survive the fallout from the global pandemic.

Malaysia Retail Chain Association president Datuk Seri Garry Chua said the WSP was useful in supporting smaller SMEs but applications should be extended beyond September and the scope expanded to also aid the larger SMEs.

Chua said the bigger SMEs had more than 200 employees and many businesses were struggling. He also requested the government to extend the loan moratorium for SMEs that were in need as banks were unlikely to take the initiative to do so.

“If there is no more cushioning, then starting October, there will be a big crunch,” he said.

Source: The Star

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