The vast majority of workers will be trapped in poverty because of inadequate retirement savings, K Veeriah writes.
Whenever the economy takes a hit the immediate response from employers is to clamour for pay cuts, reduction of allowances, no-pay leave, deductions from annual leave entitlement, lay offs and retrenchments.
Workers are also denied annual salary adjustments and annual bonuses.
All such actions, in reality, translates to either a loss of take-home pay or, in the worst case scenario, loss of employment.
In any one of these circumstances, the working population become sacrificial lambs! They are not only deprived of sustainable disposal income but also complete deprived of their constitutional right to livelihood in the case of down-sizing or retrenchment.
If such sacrifices are not sufficient, employers, spearheaded by organisations like the Malaysian Employers Federation, are now canvassing for either a reduction or complete waiver of their mandatory contributions to the workers only retirement fund, the Employees Provident Fund (EPF).
In our view such a manoeuvre is obnoxious, repulsive and downright disgusting!
Even by the EPF’s admission, an overwhelming number of workers have insufficient funds to sustain themselves after retirement. According to the EPF, more than two-thirds of contributors aged 54 had less than RM50,000 in savings in 2017.
It is EPF’s study that about 70% who withdrew their funds at aged 55 run out of savings within 10 years and are thus not able to stay out of poverty after retirement. It was also reported that, in 2017 terms, the EPF had revised a retirement saving target of RM228,000 for those aged 55 years and that only 18% of contributors had this amount.
Such a revelation by the EPF clearly puts in perspective the undisputed fact that the vast majority of workers will continue to be entrapped in poverty because of inadequate old-age savings in the EPF.
As EPF contributions, as a general rule, are pegged to total monthly wages earned and as workers are facing salary cuts, no-pay leave, withdrawal of allowances etc resulting in much lower total monthly earnings, employers would, naturally, be paying much lower mandatory contributions to the EPF compared to pre-Covid pandemic conditions.
Confronted with such a stark reality only morons would venture to further deprive workers of their already meagre retirement savings!
Given the ageing population many of whom have no other source of retirement savings, any reduction or waiver of the already insufficient EPF contributions would be a gross injustice to workers.
We, therefore, call upon employers to cease their heartless campaign to reduce or discontinue their legal obligations towards EPF contributions. We also call upon the government not to yield to such unreasonable demands from employers.
K Veeriah is secretary of the Penang division of the Malaysian Trades Union Congress