International Social Wellbeing Conference 2021 ‘The New Narrative: Turning the Tide on Inequality’

International Social Wellbeing Conference 2021 'The New Narrative: Turning the Tide on Inequality'

Speech 24 November 2021

Bismillahirrahmanirahim

Assalamualaikum Warahmatullahi Wabarakatuh and Salam Keluarga Malaysia

Yang Berbahagia Tan Sri Ahmad Badri Mohd Zahir
Chairman of the Employees Provident Fund Board

Yang Berbahagia Datuk Seri Amir Hamzah Azizan
Chief Executive Officer of the Employees Provident Fund

Distinguished delegates, guests and speakers,

1. On behalf of the Ministry of Finance, I wish to extend my sincerest gratitude to all the esteemed delegates, guests, and speakers attending the International Social Wellbeing Conference 2021.

2. My heartfelt congratulations also go to the Employees Provident Fund (EPF), the Implementation and Coordination Unit under the Prime Minister's Office, the Ministry of Finance, and the International Social Security Association, or ISSA for their contributions to the success of ISWC 2021.

Ladies and gentlemen,

3. The ISWC 2021 advocates for, and discusses efforts to achieve social wellbeing through the use of the social protection framework, which is designed to ensure the basic wellbeing of citizens. This includes social insurance and assistance programmes designed to reduce the risks and needs associated with unemployment, illness and healthcare, the loss of a spouse or parent, old age, housing, and social exclusion.

4. The scope and nature of such schemes varies from universal to means-tested and targeted provision. Social protection policies, in addition to reducing society's vulnerability to various economic risks, also serve as important macroeconomic stabilisation tools.

Distinguished delegates, guests and speakers,

5. The COVID-19 pandemic as well as the resulting economic crisis have negatively impacted people's lives and livelihoods. This has pushed the current social protection systems in many countries to their limits.

6. As a result, governments around the world have taken steps to strengthen their social protection policies, requiring additional fiscal support to supplement them. According to the IMF, since the onset of the pandemic, governments have provided close to 17 trillion US dollars in fiscal assistance.

7. Closer to home, we have announced 530 billion ringgit in economic stimulus and assistance packages. And, as outlined in Budget 2022, the Government remains committed to continuing various social protection programmes that will benefit the entire Keluarga Malaysia.

8. For example, the Government has provided 80 million Ringgit through the Kasih Suri Keluarga Malaysia Programme to protect housewives up to the age of 55 by contributing to the EPF and the Social Security Organisation, or SOCSO.

9. The Government is also committed to expand social protection coverage, particularly for the self-employed and informal workers. Among the initiatives announced in Budget 2022 is an increase in the eligible age for i-Saraan from 55 to 60 years old. The Government's matching contribution of 80% for SOCSO will also be extended to cover nine new categories of self-employed, including farmers, fishermen, hawkers, artists, travel agents, and Community Rehabilitation workers.

10. In addition, the Government is increasing tax relief of up to 4,000 ringgit for EPF voluntary contributions in order to encourage the self-employed and informal sector workers to save for retirement. We have also allocated 300 million ringgit for Job Search Allowance next year, and the tax relief limit for SOCSO has also been increased from 250 to 350 Ringgit, with the scope of relief expanded to include employee contributions through the Employment Insurance System.

Ladies and gentlemen,

11. To alleviate the people's burden due to the COVID-19 pandemic, the Government and EPF have implemented three withdrawal schemes, with a total of 101 billion Ringgit withdrawn to date.

12. While it has helped members in need, it has also raised concerns about old-age pension adequacy. Following the withdrawals, we discovered that 50% of members under the age of 55 have less than 10,000 ringgit in their account.

13. A variety of factors contribute to such concerns, including low wages, inconsistent EPF contributions, and a lack of financial literacy. However, as policymakers, we are equally, if not more, concerned about the underlying structural issues that have contributed to retirement fund inadequacy.

14. At the MOF's level, we strive to expand social security protection in accordance with the UN Sustainable Development Goals for 2030. To do so, we must analyse, acknowledge, and address the challenges to ensuring better social security.

15. As a result, under our PERKUKUH Pelaburan Rakyat Programme (or "PERKUKUH") we have launched a social security reform programme jointly managed by JPA, the EPF, KWAP, LTAT and also SOCSO.

16. This programme aims to expand the reach and effectiveness of social protection for those in need. Among the key areas of focus are widening EPF and SOCSO coverage to include the self-employed and informal sector; providing more effective support to those who have lost their income due to retrenchment and workplace accidents; and ensuring adequacy of post-retirement savings for private sector employees and Government pensioners.

17. Nonetheless, facilitating retirement savings and providing insurance coverage to the B40 are only two aspects of the vast social security system. The challenges to improving social security include adequacy of old-age pension; an ageing population, and, as COVID-19 has aptly demonstrated, global risks and shocks that could totally jeopardise one's long-term retirement plans.

1. In terms of old-age pension adequacy, by end of this year, out of the 6.1 million members aged under 55 with savings less than 10,000 ringgit, nearly 75% will not have enough funds (or at least 240 thousand ringgit) to retire above the poverty line. The EPF estimates that members will need to work an additional 4 to 6 years to rebuild the savings withdrawn during the pandemic. It is crucial that the Government strike a balance between granting early access to retirement savings as a means of short-term support, and the potential longer-term negative effect on the adequacy of old-age pension. Therefore, in Budget 2022, various measures were introduced to help people and businesses recover. These include direct aid for the B40, and partly the M40; as well as micro-loans with zero per cent interest rate and six-month moratorium.
2. Secondly, our ageing population. The Yang Amat Berhormat Prime Minister touched on this issue during his opening address. As highlighted, we are only nine years away to 2030, when 15% of the population is expected to be 60 or older. That leaves us with only few years to plan and implement age-related policies and reforms. Policies on retirement income, retirement age, and reemployment are critical to a country's fiscal sustainability. As people live longer, those without adequate retirement savings for health and long-term care will add to the financial obligations of the country. To this end, the EPF is required by law to protect its members' retirement funds. As more economic and social sectors reopen, the Government will look into ways to help the affected Keluarga Malaysia to rebuild their retirement funds
3. Thirdly, in terms of managing global risks and shocks, as well as in managing the first two risks that I have mentioned, Malaysia has undertaken extensive reforms to achieve universal health coverage. For example, through PeKA B40, the Government has already started free health screening for the vulnerable groups. Moreover, in addition to the various measures to support the health of women, children and the vulnerable groups, other measures to encourage a healthier lifestyle were introduced in Budget 2022 such as the expansion of excise duty on sugarladen pre-mix and regular drinks, as well as vaping liquids.

Ladies and gentlemen,

18. In order to overcome these challenges, it is critical that our employment and social security systems undergo a holistic reform. This will ensure adequate social security and decent work, particularly for our youth.

19. To mitigate the economic fallout from COVID-19, the MOF has made job retention and creation a top priority by establishing the National Employment Council (NEC) in December 2020. The NEC is chaired by the Prime Minister, and supported by various Special Task Forces led by relevant Ministries, as well as the MOF's National Economic Stimulus Implementation and Strategic Coordination Agency (LAKSANA).

20. Today, I am pleased to share that:

1. Firstly, as of October 31 this year, over 462 thousand new job opportunities have been created through 27 initiatives. We have consistently exceeded our monthly projections, putting us on track to provide 500 thousand job opportunities by end of the year;
2. Secondly, for Penjana Kerjaya 2.0, we have exceeded the annual target, with more than 200 thousand (211,000) workers benefited; and
3. Thirdly, with 56 thousand job placed, we have also surpassed the Shortterm Employment Programme (MySTEP)'s target of 50 thousand placements, with over 39,000 in the public sector and nearly 17,000 in GLCs.

21. Overall, these have contributed to the improvements in our unemployment numbers, which has gradually recovered to 4.5% in September this year, compared to 5.3% in May 2020. Moving forward, our labour market is expected to further recover, in line with our economic growth which is on track to achieve 3 to 4% this year, and 5.5 to 6.5% in 2022.

22. For next year, in addition to creating jobs, it is equally important that issues on unemployment and financial education are carefully looked into:

1. Firstly, on creating jobs, we have allocated RM4.8 billion to create 600,000 jobs through the JaminKerja programme in 2022. This includes an increased target for MySTEP to place 80,000 workers - 60% higher than this year. We will also enhance our efforts through JaminKerja's RM2-billion hiring incentive programme, expected to benefit 300,000 jobseekers.
2. Secondly, we must address structural employment issues such as skill mismatch, youth unemployment and underemployment. As a first step towards resolving the issue of job mismatch, the NEC has realigned training programmes to industry demands, establishing a KPI of at least 80% employment for trainees in government-funded programmes. We are proud to say that this target has been met.
3. Thirdly, we must start considering entrepreneurship as a job creator. To that end, MOF's policies for sectors such as tourism, agriculture, and the creative industries are based on nurturing entrepreneurship. It is also true that MSMEs provide approximately 70% of jobs in this country. In Budget 2022, in addition to financing, measures to incentivise the adoption of digitisation and technology will also encourage entrepreneurship.
4. Fourth, we must also acknowledge Technical and Vocational Education and Training (TVET) as a job creator. Reflecting the importance of TVET, we have allocated RM6.6 billion for its development in 2022. We hope to equip our workers with the right technical skills, particularly those who are less academically-inclined but skilled with their hands. I am happy to share that both TVET and Entrepreneurship are covered by specific NEC Task Forces; and
5. Finally, we need to seriously look at nurturing financial literacy among the rakyat. This will enable them to take personal responsibility on their retirement funding and financial well-being. Moreover, financial literacy also promotes stable household balance sheets, which benefits the economy and financial system as a whole. As a result, there is a need to instil such values as early as possible by incorporating financial education into the curriculum for pre-school, primary, and secondary schools. This must be complemented by increasing teacher's capacity and support; as well as encouraging financial education advocates among students, parental groups, and the community.

Honourable guests and participants,

23. To conclude, I certainly hope that during the two-day conference's intellectual discourse and sharing of insights, workable solutions in many challenges and issues related to inequality and social protection have been agreed.

24. I would also like to express my heartfelt gratitude to YAB Dato' Sri Ismail Sabri Yaakob, our Prime Minister, for gracing and opening the event yesterday. Many thanks to Yang Berbahagia Tan Sri Ahmad Badri and Yang Berbahagia Datuk Seri Amir Hamzah, for another successful conference. I believe this will pave the way for much broader outcomes, especially on addressing inequality and enhancing social protection.

25. It is with great pleasure that I officially close the International Social Wellbeing Conference 2021, and hope to see you all again next year, InsyaAllah.

Wabillahi taufiq wal hidayah Wassalamualaikum warahmatullahi wabarakatuh

Public link

Please use the above public link if you want to share this noodl on another website.