Expansion Of Social Protection To Mitigate Impact Of Covid 19

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Government measures to increase social protection are welcome but are still insufficient to cope with the current crisis
Informal workers are a major area of concern as they are not part of the formal employment social protection
The government should introduce urgent measures to support informal and low-income self-employed workers, including through a partnership with NGOs providing direct support and cash support based on self-declared need
The prime minister has announced four new initiatives which are part of the stimulus package to mitigate the impact of Covid-19 on 23 March 2020. The four main initiatives are:Contributors to Employee Provident Fund (EPF) who aged 55 and below could withdraw their savings from Account 2 at a rate of RM500 per month for a period of 12 months
An additional of RM500million would be allocated to the Health Ministry to fight Covid-19 and RM100million is allocated to engage 2,000 new contract health personnel
A total of RM130 million would be allocated equally to all state governments to provide assistance to those affected by Covid-19
Deferment of loan repayments to the National Education Fund Corporation (PTPTN) from three months to six months
As the movement control order (MCO) is enforced throughout the whole nation for two-weeks, the direction of the stimulus package has also shifted to more protection of individuals and SMEs from falling into poverty instead of stimulating the economic growth
What are the social protection and measures for individuals and households to mitigate the impact of Covid-19 announced prior to the four new initiatives
Bantuan Sara Hidup (BSH) of RM200 to be disbursed in May would be brought forward to March. Recipients of BSH would receive an additional RM100 in May to their bank accounts and subsequently an additional RM50 will be channelled through e-tunai
Employees contribution to Employees Provident Fund (EPF) will be reduced by four percent, from 11 percent to seven percent. The government estimated that this would unlock up to RM 0 billion worth of private consumption
The Employment Insurance System (EIS) has been expanded to include those who are instructed to take unpaid leave by their employers who are economically affected by Covid-19. Those who are registered and contributing to EIS and with a monthly salary of RM4,000 and below would be entitled to RM600 a month for a maximum of six months. The training fee is also increased from RM4,000 to RM6,000 while training allowance is increased from RM10 to RM30 per day
Medical insurance coverage has expanded to include claims related to the treatment of Covid-19 and other related claims
Two per cent discount for domestic consumption of electricity
Is the coverage of social protection sufficient to protect Malaysians against the loss of income?The stimulus package announced so far shows that the government is taking measures to ensure that Malaysians are protected in the fight against Covid-19. However, the coverage of social protection is inadequate, and it depends on how the state governments implement the assistance at the state level with the allocation of RM10 million that each state receives
In his opinion editorial, Christopher Choong, from Khazanah Research Institute, said: “Malaysia needs a massive employment-retention strategy”. He stated that the government should “extend the EIS coverage to employees affected by wage cuts as well as self-employed, similar to how it has extended benefits to unpaid leave, and second, double the pay-out amount to RM1200.”I agree that the government should expand the EIS to include those who are forced to take a pay cut due to Covid-19
However, the EIS only covers private-sector workers who are registered and contributing to EIS. It is a social insurance fund, which means that it could not be extended to those in the informal sector who have not been contributing to the fund
Who are the people in the informal sector? According to the Informal Sector Work Force Survey, 2017, there are 1.36 million workers which comprise of 9.4 percent of the total employment in Malaysia who are in the informal sector. The majority of them, 82.1 percent, are working in urban areas. They are predominantly in the services sector, with a percentage of 62.1 percent. Almost 70 percent of them are own-account workers. Most of them, 85.6 percent, have an education level of secondary or below. This means that the majority of those in the informal sector are low to medium-skilled workers and are more likely to be in the B40
I read about a heart-wrenching story on The Star on March 22, 2020, about how the poor who rely on free meals go hungry in Penang. The trishaw rider, Pak Rosman, is an example of someone in the informal sector. During this MCO, he would not have business nor could he access the free meals that NGOs distribute daily. What would happen to the informal sector workers who are poor like him
Most of the workers in the informal sector are most vulnerable to economic shocks and crisis. They live on day-to-day income. Our social protection system which only covers workers in formal employment is not sufficient and could not protect the informal sector workers in this time of crisis. It is during the time of crisis like this, which enable us to see the problems and limitations of our social protection system
What is the solution to this? I do not have a perfect solution. But we need to reach out to these vulnerable people fast, even without a perfect solution
Firstly, the government should respond to this quickly and provide food for the poor in collaboration with the NGOs who have been running the food banks. This situation shows that services beyond income support are required and food banks run by NGOs are an important source of provision to the poor. Due to the MCO, NGOs are not able to operate as they normally do. We must ensure that this MCO would not leave anyone destitute
Secondly, the government should provide cash assistance to those in the informal sector in the event of loss of income based on self-declared needs and conditions set by the government. This has been delegated to the state governments through the allocation to the states for distribution. However, it is uncertain how the allocation would be distributed at the state level
Malaysia does not have a good system to track who is in the informal sector. During non-crisis times, there are always concerns on targeting, how do we ensure that we reach out to the people that really need support? But we need to recognise that we are in a time of crisis, immediate and special measures are needed to address this fast. The government should provide support for all who needs assistance. As for the others that do not need the assistance, we should be socially responsible and not take advantage of the provisions that are available for those in need. This is not a perfect solution, but we need to take concrete measures even without a perfect solution
Thirdly, assistance for the informal sector workers should also be extended to the low-income self-employed individuals who are not covered under any formal social protection
All these measures suggested are to address the crisis that we are facing and there should be a timeframe to this assistance
During a crisis, we need to ensure everyone, all segment of the society, is protected via our social protection system. This crisis has shown us a problem that we need to address as a society: what is the level of social protection that we want? Should we continue with the informal social protection from family and community as the basis of our social protection? Or do we need a stronger safety net for the society? These are questions that we need to rethink as a society. Maybe this MCO is a time for us to reflect on some of the problems in our society. As some has rightly said, after this crisis, it would be a time to rebuild society
WAN YA SHIN is the research manager of social policy at the Institute for Democracy and Economic Affairs (IDEAS) and the author of “Malaysia: Social Protection in Addressing Life Cycle Vulnerabilities”. - Mkini

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