KUCHING: The proposed increase in employers’ Employees Provident Fund (EPF) contribution from 13 per cent to 20 per cent could make it harder for the labour market to recover.
Centre for Market Education (CME) economist Carmelo Ferlito said that the move adds to the already difficult task of finding jobs for people without specialised skills.
He stressed the need for a long-term approach to create a labour market that can generate higher wages, rather than relying on short-term measures.
“It is unfair to increase contributions from the employer alone, as the pension fund savings is a collective responsibility involving the employee too,” he said.
He added that raising labour costs is not the solution, as it could potentially lead to more unemployment.
“The government must look at other ways it can contribute to the people’s retirement savings,” he said adding the bigger issue was how to reduce people’s hardship, which has forced them to use their retirement savings to cover living expenses.
He urged the government to focus on reducing the cost of living, promoting entrepreneurship, and assisting micro, small, and medium enterprises (MSMEs), which make up more than 98 per cent of all businesses.
With over 650,000 micro-enterprises, Ferlito believed that supporting these businesses through the challenging year is essential.
“Without businesses, there will be no employees,” he warned.
He also suggested that the most pressing action for a true social mobility strategy would be to liberalise the service sector at the ASEAN level, including labour.
This means creating a united ASEAN labour market with the free circulation of workers, similar to that of the European Union (EU).
He explained that this approach would address the limited Malaysian market and the abundance of skilled labour coupled with a shortage of unskilled labour.
