SOCIAL protection includes policies, programmes and measures aimed at ensuring a basic standard of living for a nation’s people, and protecting them against major shocks such as serious illnesses, injury and unemployment.
The Covid-19 pandemic that destroyed people’s livelihoods has severely tested the current social protection policies. Bank Negara pointed out that there are three components of social protection in Malaysia – social safety nets, social insurance and labour market policies.
Social safety net aims to ensure basic needs are met, for example food, housing, health and education as well as efforts to eradicate poverty. The forms of social safety net include cash handouts, as well as benefits in kind such as public hospitals and schools.
To ease people’s burden, the government launched stimulus packages to assist workers affected by the pandemic. Direct one-off cash assistance of RM500 to RM1,600 (under Bantuan Prihatin Nasional) and one-off cash assistance of RM350 to RM1,800 (Bantuan Prihatin Rakyat) was given to those affected.
The poverty line wage in Malaysia is RM2,208 per month, with RM1,169 for food and RM1,038 for non-food items. According to Bank Negara Malaysia (BNM), the living wage in Kuala Lumpur for single, childless couples and couples with two children is RM2,700, RM4,500 and RM6,500, respectively.
Thus, it is clear the assistance provided is substantially below the poverty line or the living wage. The support for families and households is also clearly inadequate. Social insurance is aimed at providing resilience and support to individuals and families from shocks, and to prevent poverty. Most workers contribute to the support fund. Two of the major social schemes in Malaysia are EPF (Employees Provident Fund) and Socso (Social Security Organisation).
According to Unicef and UNFPA (United Nations Population Fund) report “Families on Edge: Impact of Covid-19 on low income urban families”:
· 52% of households are not protected by EPF/Socso,
· Females face greater challenge – 57% of female households are not protected.
The workers most affected by lack of social protection are those in the informal sector, micro businesses such as hawkers, and small businesses as well as workers in the gig economy. Through the i-Letsari, i-Sinar and i-Chitra schemes, EPF contributors were allowed to withdraw their savings for their needs and that of their families, in order to face the economic challenges.
Based on the withdrawals for the three schemes, it is highly probable that the savings remaining after the withdrawal by many of the contributors is almost gone. They would have nothing left for the needs of their families, such as education and housing, or have enough for their retirement. Due to their dire current needs, their future critical needs had to be abandoned.
Labour market policies are aimed at enhancing economic opportunities and potential of individuals, and includes job placement programmes, upskilling and reskilling programmes and job incentives. Labour market policies include minimum wage and workers protection laws.
The government had also assisted through the Employment Insurance Scheme, encompassing 80% of workers’ salary for the first month, 50% for the second month, 40% for the third and fourth month, and 30% for the fifth and sixth month. However, this support was only during the initial stages of the pandemic, on March 2020; after which further support was lacking.
According to a survey by the Entrepreneur Development and Cooperatives Ministry in July 2021, more than 90% of the enterprises had no insurance while 70% had no safety nets to fall back on should they lose their jobs.
Safety nets are crucial to ensure vulnerable families achieve some level of support with a minimum standard of living. Yet the BNM report, “A Vision for Social Protection in Malaysia”, states that safety net programmes are ineffective due to it being managed by multiple agencies at both the federal and state levels.
It stated, for example, that despite the sizeable expenditure of RM17.1 billion (1.1% of gross domestic product, the pay-out under each programme was small and insufficient to ensure that the most vulnerable households were able to meet minimum income and living standards.
Social protection expert Prof Emeritus Norma Mansor opined that social protection programmes in Malaysia are inadequate to mitigate risks and shocks. She pointed out that the system is fragmented and ineffective, with low coverage.
Clearly, there is a critical need to reform the current social protection policies in Malaysia.
Paul Selva Raj, Secretary General, FOMCA.
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