Photo: FAIHAN GHANI/The Star
PETALING JAYA: Increasing employer contributions to the Employees Provident Fund (EPF) will not help businesses grow or increase productivity, says the Small and Medium Enterprises Association of Malaysia (Samenta).
The association suggested that the government should, instead, focus on creating higher-value jobs for the people and help businesses and workers to be more productive.
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Its chairman Datuk William Ng said as the country is making efforts to revive the economy, an increase in EPF contribution at this juncture is not only counter-productive, but could be more harmful than helpful to the people.
A few days ago, the Union Network International-Malaysia Labour Centre had called for employer contributions to EPF to be raised from 13% to 20%.
On Monday (May 1), Prime Minister Datuk Seri Anwar Ibrahim said calls by workers for employers to contribute 20% to the EPF would be brought to the Cabinet for discussion.
In response, Ng said the nation's economic recovery process during the post-pandemic stage has remained fragile.
"While the economy has roughly recovered to 2019 levels, SMEs continue to trail larger firms in share of growth.
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"The latest available data for 2021, for example, showed that SMEs only grew by 1%, compared to 4.4% for larger firms.
"This uneven recovery is compounded by rising costs, which hit our SMEs as severely as they do consumers in general," he said in a statement on Wednesday (May 3).
He pointed out that SMEs had experienced several major challenges in recent years, from wage increases to higher operating costs.
"SMEs have had to bear two rounds of minimum wage hike since 2020, during the pandemic period, despite a severe dip in our GDP and despite a drop in productivity.
"We were also forced to adopt higher employee benefits, including longer maternity leave and lower threshold for overtime payment.
"When the government pleaded with SMEs to keep our employees on the payroll despite the pandemic, we rose to the challenge.
"As a result, the number of jobs dropped by only 2.5% between early 2020 and mid-2021, despite our GDP shrinking by 5.6%, and between 7% and 12% of businesses shutting down in 2020," said Ng.
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He said during that period, many SMEs had to dip into their reserves and their children's education funds while some even sold property and other assets to try to keep as many Malaysians employed as possible.
"We must instead increase the income of Malaysians by creating more high-value industries and jobs, encourage Malaysians to save more, and protect our SMEs at all costs so that jobs and livelihoods are protected," he added.
At present, employees contribute 11% of their monthly salary to the EPF while employers contribute 12% or 13%, depending on the statutory contribution rate.
