PETALING JAYA: Bosses are not in favour of the proposal to increase employer contributions to the Employees Provident Fund (EPF), says the Federation of Malaysian Manufacturers (FMM).
Its president Tan Sri Soh Thian Lai said mandating all employers to provide a higher contribution rate would be detrimental, especially to the small and medium enterprises (SMEs) that made up 97% of businesses.
"The FMM is not in favour of the call to increase employers’ EPF contribution as a means of boosting employees’ retirement savings, especially during this current challenging economic period where the outlook is uncertain and global growth remains fragile," he said in a statement on Tuesday (May 2).
Soh added that there was industry expectation for sales to slow down in the first six months of the year on both the local and international fronts, according to a survey by FMM which polled 745 respondents nationwide.
"The industry is of the view that the focus of the government at this point of time should be on short-term and immediate initiatives for workers to have more money in their pockets and to improve the purchasing power of the rakyat amid the continued price pressures that impact everyone.
"The government's focus should be on keeping the cost and standard of living of the rakyat manageable as well as ensuring a positive economic growth trajectory which would provide a conducive environment for businesses to increase their profits and improve their cash flow which would then be able to support better wages and benefits for their employees," he said.
Under the current EPF schedule of contribution, the employer’s contribution is at 13% for those earning RM5,000 and below and 12% for those earning above RM5,000.
Soh said in addition, the monetary value of the employer’s contribution does not remain stagnant but increases yearly based on wage adjustments in tandem with the changes to the Consumer Price Index.
While the statutory contribution rates for employers were fixed, employers also had the discretion to contribute a higher percentage based on their respective human resource and talent retention strategies where their contribution was tax-deductible up to 19% of the employee's pay, said Soh.
"In addition, we believe that with EPF’s strong governance structure and continued prudent and good investment practices that has produced enhanced returns, it will continue to strengthen and enrich the retirement savings of its members," said Soh.
He added that the current conditions of deduction and contributions towards the retirement savings for EPF members were also sound in meeting future needs.
Soh added that any proposal or policy change that would have a direct cost impact on businesses must be done with full consultation of all stakeholders.
On Monday (May 1), Prime Minister Datuk Seri Anwar Ibrahim said that calls by workers for employers to contribute 20% towards EPF would be brought to the Cabinet for discussion.
At present, employees contribute 11% of their monthly salary to the EPF while employers contribute 12% or 13%, depending on the statutory contribution rate.
