Andrew Lo

KUCHING: Malaysian Trades Union Congress (MTUC) Sarawak foresees that adverse economic consequences due to the Covid-19 pandemic is inevitable and businesses will find it very hard to pick up where they left off even after the movement control order (MCO) is lifted.

MTUC secretary Andrew Lo said when the time comes companies might have to close down or scale down their operations and consequently retrench workers.

“This will affect all sectors, not just SMEs (small-medium enterprises). The retrenchment will further dampen the economy as domestic consumption and demand will fall further,” he said in a statement yesterday.

He said it was unfortunate because the country’s social safety net had too many gaps. While those under the Employment Act and Sarawak Labour Ordinance are entitled to termination and lay-off benefits equivalent to 20 days’ wages for each year of service, those earning above RM2,000 will depend on their contracts and also on their ability to take their claims for compensation to the Industrial Court.

“While the Industrial Court generally award compensation of one month’s salary for each year of service, it also depends on whether or not the companies can pay. Retrenchment benefits do not have priority over our secured debts. All too often, workers are unable to recover their benefits,” he said.

He stated that while it is fortunate that the country has introduced Employment Insurance Scheme in 2018, the benefits are minimal with an average of only half a month’s salary for six months.

“If not for some employer groups’ undying objection, the scheme could have started as early as 2010 and contribution rates would have been higher. The scheme would have built up sufficient funds to offer a more comprehensive safety net.

“It must be noted that employment benefits are not just to assist workers in difficult times; it will assist the business as the money will be circulated back into the economy and help businesses recover.

“This in turn will help prevent a vicious circle and as usual, poor workers will end up with the short end of the stick,” he said.