Unemployment-Related Benefits Systems

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Unemployment-Related Benefits Systems in Malaysia
June 2000

Prepared by Ms Eva LIU Mr Walter KWONG

Research and Library Services Division Legislative Council Secretariat

5th Floor, Citibank Tower, 3 Garden Road, Central, Hong Kong Telephone : (852) 2869 7735 Facsimile : (852) 2525 0990 Website : http://legco.gov.hk E-mail : library@legco.gov.hk

page Acknowledgements Executive Summary Part 1 - Introduction Background Objectives and Scope Methodology Part 2 - Unemployment Benefits System in Malaysia Background Unemployment Benefits System Part 3 - Welfare Benefits System in Malaysia Severance Pay Employees Provident Fund Work Injury Insurance Services for the Poor Part 4 - Proposal for a National Retrenchment Scheme Appendices References 1 1 1 2 3 3 3 4 4 4 5 5 7 8 13

--------------------------------------------------------------------------------------------------------------------------The Legislative Council Secretariat welcomes the re-publication, in part or in whole, of this research report, and also its translation in other languages. Material may be reproduced freely for noncommercial purposes, provided acknowledgement is made to the Research and Library Services Division of the Legislative Council Secretariat as the source and one copy of the reproduction is sent to the Legislative Council Library.


We gratefully acknowledge the assistance given to us by many people in this research project. More specifically, we would like to thank Mr Ahmad Rasidi Hazizi, Consul-General of Malaysia in Hong Kong, Dato Zaninol Abidn Bin Abd. Rashid, General Secretary of the Ministry of Human Resources, Mr Shamsuddin Bardan, Executive Director of the Malaysian Employers Federation, Mr Zainal Rampak, President of the Malaysian Trades Union Congress and Dr William K.M. LEE, Associate Professor of Department of Politics & Sociology, Lingnan University. In particular, we would like to express our gratitude to Prof Chang Chak Yan, Director of the Research Programme on Ethnicity and Overseas Chinese Economics, Lingnan University for his kind assistance.



There is no unemployment insurance or unemployment assistance system dedicated to helping the unemployed in Malaysia. The Government is of the view that it has maintained a suitable investment environment in Malaysia which has enabled Malaysia to achieve full employment since the late 1980s. Hence, there does not appear a need to establish an unemployment insurance or unemployment assistance system dedicated to helping the unemployed in Malaysia. Related welfare benefits in Malaysia include severance pay, benefits for old age, disability, death, employment injury and invalidity. However, no cash assistance is made to the unemployed under the relevant schemes. Malaysia also runs a programme to eradicate poverty. Households which suffer from poverty, whether or not it is caused by unemployment, can apply for assistance under the programme, subject to a means-test. This may secure the basic needs of the unemployed but the programme is not unemployment-specific.





PART 1 - INTRODUCTION 1. Background

1.1 In October 1999, the Panel on Manpower and the Penal on Welfare Services requested the Research and Library Services (RLS) Division of the Legislative Council (LegCo) Secretariat to conduct a study on unemployment-related benefits systems. 2. 2.1 Objectives and Scope The objectives of the study are: !



to examine the experience of China, Taiwan, Malaysia, Malaysia, South Korea, the United Kingdom (UK), and the United States (US) in implementing their unemployment-related benefits systems; to outline the research findings of the Organisation for Economic Co-operation and Development (OECD) and the Conventions and Recommendations of the International Labour Organisation (ILO) in unemployment benefits systems; and to make an overall...
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