Every sen matters: Kay says although the amount is small, it snowballs to large amounts, especially for big companies with lots of manpower.
PETALING JAYA: Employers of foreign workers were taken aback recently when told they had to fork out 40% more to pay for the extra benefits under the mandatory Social Security Organisation (Socso) invalidity scheme.
The scheme includes invalidity pensions and grants, as well as funeral benefits, for workers.
Since employers are now paying a higher monthly sum for the Socso invalidity scheme for their foreign workers, they want the government to exempt them from paying for the Foreign Workers Hospitalisation and Surgical Scheme (FWHS), which is also mandatory.
As an example, they said an employer with a foreign worker earning between RM2,300 and RM2,400 monthly paid only RM29.40 monthly for Socso prior to July 1, but will now have to pay RM41.15 monthly while the worker will have to fork out RM11.75 for their share.
Calculated annually, this will amount to RM493.80 for the employer compared with RM352.80 previously, or an additional RM141 per worker.For employers that have around 100 foreign workers with an average salary of RM2,300, the additional amount will be more than RM14,000 annually, which bosses claim is too high a price for them to bear.
Association of Employment Agencies Malaysia vice-president Suresh Tan said employers would need to pay 40% more per month to cover the additional Socso payment for foreign workers.
He added that employers paid around RM200 annually for Socso insurance for their foreign hires up to June 30. Post July 1, they will have to pay around RM300.
Tan said employers still have to pay RM170 for a separate health insurance required when applying and renewing for foreign worker’s work permits, which he argued should be optional.
Federation of Malaysian Manufacturers (FMM) Penang chairman Datuk Lee Teong Li said industries in Penang welcome the government’s move to enhance workers’ benefits.
However, he asked if the Socso invalidity scheme would replace the existing foreign worker insurance scheme, which is also mandatory.
“It is an inclusive policy change that aligns with international standard practice.
“However, implementing and enforcing the extensions of the Socso Invalidity Scheme will have some challenges to some employers in their implementation, sustainability and compliance,” he said.
An employment agency owner who only wished to be known as Kay, 58, said many employers had asked whether they should deduct the additional contribution from their workers’ salaries.
“The answer would usually be ‘yes’ as employees would have no choice, in return for full protection and repatriation. Unfortunately, there are employers who have been struggling with slim profit margins. It hurts them more to know that the Socso contributions are ‘burnt’ once the contract of employment ends.
“This is unfair and seen as an additional burden to employers, who already provide insurance for their foreign workers.
“If the worker is already paid a minimum wage, that means the employer would need to fork out the additional money.
“Although the amount is small, it snowballs to large amounts, especially for big companies with lots of manpower,” he added.
Kay, who provides foreign workers from various countries for employment in small and large corporations, said the government should not just merely calculate the benefits of the plan with “mere figures”.
“They should take into consideration the current economy and hardship (faced by) industries.
“If the costs to operate and maintain labour continue to go up, I worry that investors will relocate to neighbouring regions to cut costs,” he said.
PA Food Sdn Bhd managing director Ding Hong Sing said SME (small and medium enterprise) owners have been paying for mandatory personal accident insurance for foreign workers.
“This is an additional problem for us and we cannot sustain our business with these increasing costs,” he said, adding that one outcome would be to shift the extra costs to consumers.
Ding, who is a food industry owner, employs around 100 foreign workers.
After July 1, he had to pay around RM41 for accident coverage per employee per month.
“This can cost up to tens of thousands per year for SMEs, especially those that hire more foreign employees,” he said, suggesting that employers should only be required to pay for one type of coverage.
