Why was the initial EIS contribution rate reduced?

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The Initial Employment Insurance Scheme (EIS) Contribution Rate Was Reduced Due to Stakeholder Objections

The initial proposed contribution rate for the Employment Insurance Scheme (EIS) was reduced from 0.5 per cent to 0.2 per cent following significant objections from both workers and employers. This revised rate reflects a compromise reached after extensive consultations, with the aim of making the scheme more palatable and proportionate to the needs of retrenched workers. The adjustment will be incorporated into the revised EIS Bill scheduled for tabling in Parliament in October.
Stakeholder Concerns Led to the Reduction

Strong objections were raised by workers and employers who deemed the initial statutory contribution rate of 0.5 per cent of monthly salaries to be excessively high and disproportionate to the number of workers being retrenched. This sentiment led to the withdrawal of the initial Bill, prompting further discussions to find a more acceptable contribution structure.
A Compromise Rate Was Agreed Upon

Following a meeting with stakeholders on August 10, an agreement was reached to revise the contribution structure. The revised proposal stipulates a contribution of 0.5 per cent from employers and a reduced rate of 0.2 per cent from workers. This compromise addresses the concerns about the financial burden on employees.
Previous Proposals Varied Significantly

Prior to the final agreed-upon rates, there were differing suggestions for contributions. The initial proposal was set at 0.5 per cent of monthly salaries. However, both the Malaysian Trade Union Congress (MTUC) and the Malaysian Employers Federation had previously suggested a more modest monthly contribution of RM1 from each worker, employer, and the government.
The Revised Bill Will Be Tabled in October

Human Resources Minister Datuk Seri Richard Riot confirmed that the revised EIS Bill, incorporating the reduced contribution rates, will be presented to Parliament during the upcoming session in October. This move signifies the government's commitment to moving forward with the scheme after addressing the critical feedback received from key stakeholders.

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Why was the initial EIS contribution rate reduced?

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