Social protection includes policies, programmes and measures aimed at ensuring a basic standard of living for a nation’s people and protecting people against major shocks such as serious illnesses, injury and unemployment. The covid pandemic which certainly seriously damaged people’s livelihood has severely tested the current social protection policies.
Bank Negara would suggest that there are three components of social protection – social safety nets, social insurance and labour market policies.
Social safety nets aims to ensure basic needs are met example food, housing, health and education as well as eradicating poverty. The forms of social safety net include cash transfers, as well as in-kind benefits such as public hospitals and schools.
During the covid, the Rakyat Stimulus Packages were introduced to assist workers affected by the pandemic. Direct cash assistance of one-off RM 500 to RM 1,600 (under the Bantuan Prihatin Nasional) and cash assistance of one off RM 350 to RM 1,800 (Banuan Prihatin Rakyat) was given to those affected.
The Poverty Line Wage in Malaysia is RM 2,208 per month, with RM 1,169 for food and RM 1,038 for non-food items. Further according to Bank Negara Malaysia living wage in Kuala Lumpur for single, childless couples and couples with two children are at RM 2,700, RM 4,500 and R 6,500 respectively.
Thus clearly the assistance provided is substantially below the poverty line or the living wage. Thus the support is for families and households is clearly inadequate.
Social insurance aims at providing resilience and support to individuals and families from shocks to prevent poverty. Often the worker also contributes to the support fund. Two of the major social insurance schemes in Malaysia are EPF (Employees Provident Fund) and SOCSO (Social Security Organisation).
According to the UNICEF and UNFPA Report “Families on Edge: Impact of covid 19 on low income urban families”:
- 52% of households are not protected by EPF/SOCSO
- Females faced greater challenge. 57% of female households are not protected.
The workers most affected by lack of social protection are the workers in the informal sector, micro business such as hawkers and small businesses as well as workers in the gig economy.
During the pandemic, through the i-Letsari, i-Sinar and i- Chitra schemes, EPF contributors were allowed to withdraw their savings to face the current economic challenges for themselves and for their family’s urgent needs.
Based on the withdrawals for the three schemes, Lestari, Sinar and Citra, it is highly probable that for many of the contributors, after their withdrawal from the various schemes, the savings remaining is almost gone. They would have nothing left for the needs of their families, such as education and housing needs or have enough for their retirement. Due to their urgent current emergency needs their future critical needs have had to be abandoned.
Labour market policies aims at enhancing economic opportunities and potential of individuals and includes job placement programmes, upskilling and reskilling programmes and job incentives. Labour market policies include minimum wage and workers protection laws.
During the Covid, the government assisted through the Employment Insurance Scheme, encompassing 80% of the salary for the first month, 50% for the second month, 40% for the third and fourth month and 30% for the fifth and sixth month. However, this support was only at the early stages of pandemic that is on March 2020; further support was lacking.
According to a survey by the Entrepreneur Development and Cooperatives Ministry in July 2021, more than 90% of the enterprises had no insurance while 70% had no safety nets to fall back on should they lose their jobs.
Safety nets are crucial to ensure that vulnerable families achieve some level of support to ensure a minimum standard of living. Yet, the BNM Report, “A Vision for Social Protection in Malaysia”, states that safety net programmes are less than effective due to it being managed by multiple agencies at both Federal and States levels. It states for example that despite the sizeable expenditure of RM 17.1 billion (1.1% of GDP), the pay-out amounts under each programme tends to be small and insufficient to ensure that the most vulnerable households were able to meet minimum income and living standards.
An expert on social protection, Prof. Emeritus Norma Mansor would also suggest that social protection programmes in Malaysia are inadequate to mitigate risks and shocks. She suggested that the system is fragmented and ineffective with low coverage.
Clearly there is a critical needs to reform the current social protection policies in Malaysia.
