Social protection in Malaysia is inadequate

The current Prime Minister said “New and innovative social protection solutions are urgently required to strike a balance between the provision of safety nets, promote financial resilience and human capital development” [The Sun, 23 Nov 2021] while NUBE secretary general J Solomon, said that since the government used the Employees Provident Fund (EPF) to stimulate the economy during the Covid-19 crisis, the money should be returned [The Malaysian Reserve, 23 Nov 2021]. NUBE says some 3.6 million members have less than RM1,000 in their savings, leaving them vulnerable and unprotected for their retirement. On one hand the government talks about social protection solutions, on the other hand EPF members were encouraged to withdraw money [RM101 billion withdrawn] from their savings during the pandemic and making them more vulnerable. It must be noted that the porportion of Malaysia’s population aged 65 and over is increasing (7.4%, 2021: DOSM). Is the pandemic to be blamed? COVID is forcing us to rethink and recalibrate our approach because many people have lost their income, their jobs, their family members, their assets and their savings. This has led to poverty, poor health and much more unbearable situations to the extent some have attempted suicide.

The World Social Protection Report 2020-2022 says a cumulative number of 1,600 social protection measures were announced in response to the Covid-19 crisis (Feb – Dec 2020). This is unprecedented, but the pandemic has also exposed the gaps. As we are in a recovery period. The lessons we have learned should help us to improve.

What is Social Protection?

Social protection is defined as the set of policies and programs designed to reduce poverty and vulnerability by promoting efficient labor markets, diminishing people’s exposure to risks, and enhancing their capacity to protect themselves against hazards and interruption/loss of income.

In Malaysia we have EPF, SOCSO (Social Security Organisation) for both employment hazard (also covers migrant workers) and job loss (employment insurance scheme or EIS), Civil Service Pension Scheme, MySalam National Health Scheme and social assistance program under the Ministry of Women and Community Development for the elderly, single parents, children, for emergency/disasters and other vulnerabilities. This is mainly cash assistance and short term aid. Government is also encouraging upskilling and reskilling which is co-ordinated by Human Resource Ministry (HRM). Hiring incentives and Short-Term Employment programmes s(MySTEP) were also introduced in recent years, implemented by SOCSO ( It is also tied to the EIS that provides both monetary benefits and job-search assistance when anyone loses their job.

How effective are the existing social protection schemes?
What we commonly hear from workers or activists and labor organizations such as JPKK (Government Contract Workers Network) and JPTF (Informal Workers Network) is that employers are not complying with the Employment Law to pay EPF and SOCSO! They even started a petition []. These informal workers incude

  • Contract Workers
  • Lorry Drivers
  • Gig Workers
  • Other Informal Workers
  • Migrants

How do we find out how many employees are facing non payment of EPF and Socso funds from their employers? According to the EPF website, there are 14 million EPF members. It is uncertain how many are active contributors considering the data for year 2020 shows some 14.9 are employed but only 9.4 million are wage earners (full time job). The remaining are either self-employed or unpaid workers. Perhaps EPF and HRM has the data to address the social protection gap.

EIS to help GIG workers and Self Employed

The Informal Sector Work Force Survey Report by DOSM (2019) adopts ILO’s (International Labor Organisation) definition “The informal sector may be broadly characterized as consisting of units engaged in the production of goods or services with the primary objective of generating employment and incomes to the persons concerned. These units typically operate at a low level of organisation, with little or no division between labour and capital as factors of production and on a small scale.” The survey says, almost 70 per cent of informal employment in the informal sector comprised of self-employed persons.

The Institute of Strategic Analysis and Policy Research (Insap) said in a statement (FMT, 01 July 2021) to allow jobless micro firm owners, gig workers, self-employed workers, and contract-based workers access to the EIS facility, as they are excluded from aid measures such as the loan moratorium and wage subsidy.

No Job Guarantee No Social Protection

For wage earners, minimum wages are also a form of protection. The minimum wage remains RM1,200 for urban and RM1,100 for rural areas since 2020, but workers are still reporting that they are not paid the minimum wage []. In fact many had to suffer pay cuts or nonpayment of wages during the pandemic. According to JPKK, contract work means jobs are not guaranteed and they are hired as new workers every year or so. It also means no wage increments or other benefits. Social protection for an estimated 150,000 cleaners and security guards in government hospitals and schools are affected with such contract systems []. A majority of them are local workers. It is a common misconception that they are migrant workers!

More Resources for Labor Protection

If all employers are registered with the government, then there should be a centralised mechanism (e.g. database) to monitor compliance, unless the companies are operating illegally. Another gap identified by the labor activists is access to a labor department office. If they want to file a case, the location is often too far, given they have to frequently attend for the reconciliation process. The workers cannot afford the cost. Some workers are not familiar with the whole process and procedures. To engage legal representatives is even more costly.

Refer to the Salary and Wages Statistics below, which shows monthly wages remain below RM2,100 even when the cost of living keeps rising (

According to the MTUC (Malaysian Trade Union Congress) only 6% (875,193 of the 14.5 million workers) are organized. If we exclude civil service workers, less than 2% (359,206 workers in private sector; MK 19 Nov 2017) are unionised! Probably a result of growing contractualization and the informal work system. As a consequence of this low rate of unionization, workers (both formal and informal) lack awareness of their rights and support systems including labor service centers in strategic locations. A survey conducted by PSM (Parti Sosialis Malaysia, April 2021) provides a detailed explanation on this and they provided recommendations to the Human Resources Ministry. The recommendations include reducing costs for workers, not to restrict representation during the reconciliation process, and others. There is a huge gap in ensuring social protection.

Extend Social Protection to Vulnerable Communities

Everyone was affected during the pandemic, but some were affected far more than others. For example, migrants and refugees were completely marginalized. Not without public pressure were they later given access to vaccination and some basic needs. Something that I was grateful for during the pandemic was the fact that we still have government run hospitals. Imagine if this important public service were also privatised like many others!

Below are some suggestions based on the gaps identified, taking reference from ILO Social Protection Platform and others, to reflect on.

(a) In 2008, the Government of India passed the Unorganised Workers’ Social Security Act, which stipulates minimum social security measures for informal sector workers, including health and maternity benefits, old-age pensions and death and disability grants. Subsequently, national- and state level social security boards were set up to implement the provisions of the Act. The Act also encourages the formation of WFCs (Workers Facilitation Centres). WFC bridges the gap between the Goverment’s programmes and intended beneficiries.

(b) Universal Basic Income (UBI): a much debated policy. PSM (Parti Sosialis Malaysia) proposed modified universal basic income to anyone who does not currently have a source of income, to boost the economy especially during the recession/pandemic situation. PSM is proposing RM1,000 a month under the modified UBI as the amount should be enough to cover the purchase of basic food supplies but not too high that it discourages people from working. [Malaysia Kini, 14 Jun 2020]. This is an unemployment protection.

(c) Universal Child Benefit – highly recommended to ensure childrens’ well-being. It can also respond to the financial burden of high childcare costs. UNICEF’s 2019 report says that in Malaysia, 20.7 per cent of children under five suffer from stunting and 11.5 per cent from wasting, 12.7 per cent of children (5–19-year-olds) are obese. Poor urban areas in Malaysia record higher percentages of malnourished children than the national average indicates. Khazanah Research Institute (KRI) has proposed to establish a universal child benefit (UCB) scheme. According to KRI, there are programmes such as the Bantuan Kanak-Kanak assistance as well as tax benefits but only high income earners tend to get higher tax benefits while those in the middle, who do not qualify for Bantuan Kanak-Kanak, do not have a high enough income to benefit adequately from tax relief [The Edge, 23 Sept 2021].

(d) Old Age Social Protection Scheme: recommended by MTUC. MTUC is proposing a nominal percentage from taxes collected be set aside into a pension fund or, alternatively, channelled to the Employees Provident Fund (EPF) whereof an equitable pension payment scheme be devised to provide for retirees, because the ageing population would neither have sufficient EPF savings post retirement nor an old age social security fund to provide them with financial sustenance. (Focus, 11/1/2021)

(e) Labor Right for Refugees: Malaysia with some 180,000 refugees has been hosting refugees since the 1980s. They are significant labor force in our informal economy. They have been facing exploitation without any legal protection. They should be provided work rights and other benefits as per the Employment Act. Since Malaysia is part of the United Nations (UN) 2030 Agenda for Sustainable Development and recently elected to the United Nations Human Rights Council for 2022-2024 term, we need to honor the international refugee protection including UDHR.

I will end this article with a quote from the World Social Protection report,
“Social security is not charity, but a fundamental human right. The challenges that individuals and societies face today are manifold, including ever more rapidly changing labour market. Universal social protection is both an indispensable safeguard and a lever, enabling people to live dignified lives and to embrace change with confidence. Universal social protection, guarantees that all members of society are well protected, be they children or older persons, or those affected by ill health, unemployment, or disability, on a basis of social solidarity and collective financing. By ensuring access to healthcare and income security, it prevents or at least alleviates poverty and reduces vulnerability, social exclusion, and inequality, while supporting growth and prosperity”

Letchimi Devi

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