Hands off workers' retirement savings

LETTER | Dipping into workers’ retirement savings must never be a consideration taken to stimulate the economy via domestic spending as workers, especially those in the lower wage bracket, will suffer the consequences of insufficient savings during their golden years when there is no other income to depend on.

Persatuan Sahabat Wanita Selangor (PSWS) vehemently rejects this proposed measure which is to be part of the 2020 Economic Stimulus Package lauded by a few economists, where workers will be given the option to cut their respective minimum contribution rate to the Employees Provident Fund (EPF) by four percent to put more cash into their pockets.

However, the current uncertain political climate that looms over Malaysia may affect the rolling out of the stimulus package, and this is a reminder to the government that resorting to such tactics that reflect poor governance should be refrained from.

PSWS is highly concerned that, although a short-term measure, why should a stimulus package, designed to boost the country’s economy against the impacts of the Covid-19 outbreak, “steal from workers’ retirement savings” to increase the disposable income of consumers.

The RM10 billion worth of private consumption this scheme could potentially release can also be raised through tax rate hikes on the highest-income taxpayers and a modest wealth tax plan combined with measures to stifle tax avoidances.

Although the scheme leaves it to the personal financial judgement of a worker, the stimulus package should not make a worker choose between having a little more to spend now and suffer the consequences of having deficient savings in her retirement years.

This scheme has no long-term benefit and will adversely affect women workers.

We are especially concerned with the plight of women workers in the B40 group (bottom 40 percent) who are already struggling to make ends meet with their meagre minimum wages, who will definitely opt to reduce their current contributions into their retirement savings.

The early payout of RM200 to all Bantuan Sara Hindup (BSH) recipients, along with an additional RM100 a month later, might be helpful but the hike of the minimum wage to workers across the country (including East Malaysia) will negate the need for weak measures that have no long term benefit to the Malaysian economy.

Women workers in the informal sector are especially at risk of falling into employment traps that strip them of their dignity. While the stimulus package looks at the country’s economy, the respective government labour departments need to step up their enforcement units to be vigilant of errant businesses that keep women workers in precarious employment.

Persatuan Sahabat Wanita Selangor is a women's workers rights organisation formed in 1984.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.