Tan Sri Muhyiddin Yassin announcing the new PEMERKASA assistance in Putrajaya on March 17. — Bernama Photo
KUCHING: The Perikatan Nasional government’s Wage Subsidy Programme introduced late last year, is vital in keeping the economy afloat and protecting the welfare of both businesses and workers across industries amid the challenges brought about by the Covid-19 pandemic.
More than 2.7 million jobs were saved last year after the programme was launched in April last year, and extended in October to December with a total allocation of RM14.4 billion. The programme had benefited more than 320,000 employers.
For this year, the Wage Subsidy Programme 3.0 entails a wage subsidy of up to RM600 per employee, which is enhanced under PERMAI (Malaysian Economic and Rakyat’s Protection Assistance Package) to include all employers operating in Movement Control Order (MCO) states regardless of sectors from just employers in the tourism and retail sector under Budget 2021.
The eligible amounts are as follows: current recipients (tourism and retail sector) whereby RM600 will be allocated for each employee per month for three months; new applicants (tourism and retail sector) whereby RM600 is allocated for each employee per month for six months; and current PSU recipients and new applicants (all economic sectors in MCO states) which allocate RM600 per employee per month for one month.
The research arm of Kenanga Investment Bank Bhd (Kenanga Research) believes that the PERMAI wage subsidy will be of great help, especially for the retail and tourism subsectors.
“The retail and tourism-related sub-sectors would remain under pressure as demand would be hampered by mobility restrictions and soured consumer confidence.
“This would result in cost-cutting measures, including wage cuts and retrenchment, prompting the unemployment rate to remain elevated. However, the impact would be cushioned by the enhanced version of Wage Subsidy Program 3.0,” it said.
Meanwhile, the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) expected Malaysia’s labour market recovery to continue this year benefiting from the government initiatives to support employment growth such as MySTEP and the extension of Wage Subsidy Programme and the expected rebound in economic growth.
“What is more encouraging is that the latest data suggests the implication on the job market from the tighter restrictions seem to be minimal as business operations were generally allowed to continue even during MCO 2.0.
“Nevertheless, with the reopening of the economy and relaxation of movement control on the economy, business and consumer activities are expected to pick up from the second quarter of 2021 (2Q21) and this will result in improving business confidence and better outlook for the labour market, going forward.”
To recap, Prime Minister Tan Sri Muhyiddin Yassin had said that as of March 5, 2021, the government had channeled more than RM14.4 billion to fund wage subsidy programs that have helped 2.7 million workers and more than 330,000 employers.
“However, the government is aware that there are still sectors that are affected,”the Prime Minister said in his speech announcing the PEMERKASA package in March. “Therefore, the government will allocate RM700 million to extend the Wage Subsidy Program 3.0 for another three months in a more targeted manner.
“This is mainly to the tourism sector, wholesale and retail trade, as well as other businesses closed during the MCO such as gymnasium and spa sports centers. This initiative is expected to help 400,000 workers and 37,000 employers.”
The government’s move to allocate RM700 million more to extend the Wage Subsidy Programme 3.0 for another three months under the PEMERKASA stimulus package will benefit the tourism sector, wholesale and retail trade sectors, as well as other businesses closed during the Movement Control Order (MCO).
Kenanga Research saw that under the PEMERKASA, the RM11 billion direct injection, along with the gradual relaxation of movement restriction measures, will likely support an expected economic recovery in the second half of this year.
“These measures will ensure a long-term recovery by prioritising national herd immunity and improving the nation’s competitiveness by promoting digitisation and investment,”Kenanga Research commented.
“Furthermore, these measures will help sectors still affected by the pandemic, such as tourism, whilst ensuring sustained support for businesses and the public by continuing several assistance programs, for example Wage Subsidy Programme.”
While growth is expected to remain pressured in the 1Q21 due to the reimposition of MCO 2.0, Kenanga Research expected the impact would be less severe given that more businesses are allowed to resume operation with tight standard operating procedures.
“The downside to growth persists as the affected industries such as retail and tourism-related sub-sectors would remain under pressure due to prolonged interstate travel banned as well as the year-long international border closure.
“Nonetheless, we expect the impact to be minimal as the government continues to provide support via various initiatives to revitalise the tourism and retail sectors.”
Saving jobs, keeping companies afloat
“Despite the Movement Control Order (MCO), Conditional MCO and Recovery MCO, we are implementing talent retention strategies to ensure the job security of our employees. We’ve also tapped the government’s assistance such as the Wage Subsidy Programme, to ease the burden of our employees during this challenging period.
Despite minor disruptions with lower projected domestic and exports sales, the financial assistance has enabled us to stay afloat, safeguard employment and we didn’t have to resort to salary cuts too. Overall, the wage subsidy is a win-win for both employers and employees.
We are hopeful that the Government will provide more aid to those who really need it as it is very instrumental in the initial business recovery process. The wage subsidy will help companies with cash flow and any further assistance to help meet their operational costs, including raw material and manpower costs.”
Dato Sri Victor Hii
Group Managing Director of ASTEEL Group
“The Wage Subsidy Programme is a timely move to assist the business sector as most entrepreneurs right now are under tremendous stress due to the Covid-19 pandemic.
The drop in sales has been severe and most of them have been rightly focusing on surviving the pandemic, instead of making profits. Our company has witnessed a drop in business and we are trying to make sure the sales we generate would be sufficient to cover our operating costs. It’s our aim to maintain our workforce.
Undoubtedly becoming unemployed or being retrenched is something dreaded by any worker and we are doing everything we can to retain all of our workers. We hope the Wage Subsidy Programme could be continued in the near and medium future as consumers are still cautious.”
Herinawati Drahman
Applegate Corporate Services Sdn Bhd Director
“The Wage Subsidy Programme has definitely helped us a lot, especially those small and medium enterprises (SMEs). Although normalcy has yet to return to the economy, my business is operating with full workforce capacity and this has definitely caused higher expenses for us to pay our workers. Under this situation, we really need the government to step in, and introducing this Wage Subsidy Programme was definitely welcome news.
It improves our cash flow because we are already operating at full capacity but the economy has not returned to 100 per cent. The financial assistance from the government to pay our workers could provide greater flexibility to us to maybe hire more people. A total of 8 workers are benefiting from this programme at my coffeeshop.”
Kapitan Tan Yit Sheng
Heng Ki Kopitiam Sdn Bhd Marketing Manager
“This Wage Subsidy Programme will basically improve our cash flow and assist us in our business expansion with the financial incentive to hire workers. Under this programme, I have managed to employ fresh graduates and equipped them with the necessary skill sets during this financially difficult period. The programme is a well-thought policy for both the employers and employees as it would actually encourage us to provide more employment opportunities and those who are unemployed will be able to secure a job during this period.
It is a given fact that the past year has been a financially difficult period for everybody and the Wage Subsidy Programme provides timely support to the labour force and economy to function as normal as possible. It would definitely lift some financial stress from our shoulders and I believe all parties would stand to benefit from the programme.”
Alvin Chung
CSF Agency owner and manager
“The Wage Subsidy Programme indirectly gives me job security as it enables my employer to retain me. Since the MCO started, my boss had applied for us to be under the programme and it actually goes a long way to helping us.
As my company mostly deals with government projects, we are not affected too drastically by the economic downturn but sectors, like the tourism industry, need this financial assistance greatly.
Being placed under this Wage Subsidy Programme would also lower the likelihood of my company needing to implement a pay-cut to save costs and for this, I am truly grateful to the federal government. I have known many of my friends who got retrenched during this health and financial crisis and I hope the Wage Subsidy Programme, coupled with other high-impact initiatives, would allow normalcy to return to our economy and workforce soon.”
Borris Jerry Beti
Site supervisor
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