MTUC calls for RM10b revolving fund to assist B40 and M40 groups

J Solomon

20 Feb 2020, 3:06 am

Updated 5 months ago


LETTER | The government is set to announce a stimulus package on Feb 27 to mitigate the economic effects of the Covid-19 virus outbreak. The Malaysian Trades Union Congress (MTUC) expects this fiscal stimulus to cater to the needs of key players in the economy as well as small and medium enterprises (SMEs). This has been the practice in similar government interventions in the past.

However, this time around, MTUC is strongly urging the government not to forget the plight of millions of workers, mainly from the lowly paid B40 and M40 categories who will be adversely affected by the economic impact of the Covid-19 outbreak.

The needs of these workers were largely ignored in stimulus packages in the past, and we hope this government will do better to help them in their time of need.

Already suffering from low wages and high cost of living, the Covid-19 global outbreak will further impact their livelihood. We expect employers to take harsh measures to reduce costs, including a freeze on overtime and reduced bonus as well as whatever other little benefits workers receive.

Already the Malaysian Employers Federation has warned that up to 100,000 workers risk being laid off if the Covid-19 virus outbreak was to persist until year-end.

All these drastic cost-cutting measures by employers will mean job losses or workers facing further cuts in their take-home pay at a time when they are already grappling with low salaries and a spike in the cost of living.

The drop in business endured by tycoons and conglomerates due to the Covid-19 outbreak will be mitigated when the government steps in next week with a multi-billion ringgit economic stimulus package.

However, the million-dollar question is, who will help the low wage earners impacted by the economic effects of the Covid-19 outbreak?

Based on our experience, employers will readily accept the government’s economic aid and incentives, but little of that assistance, if any, will trickle down to the workers who have kept the economy ticking, in good times and bad.

Apart from possible cutbacks in their income, the workers also risk being retrenched or offered voluntary separation schemes (VSS) by unscrupulous employers under the guise of the Covid-19 outbreak.

All in all, the government must recognise that the Covid-19 outbreak will likely lead to workers getting smaller pay packets or even losing their jobs, pushing them into further financial turmoil. This will result in workers facing more hardship in servicing their monthly housing, car and personal loan repayments apart from household expenses.

As such, MTUC is calling on the government to establish a RM10 billion revolving fund to directly help the B40 and M40 workers as part of its economic stimulus package.

This fund will offer loans up to RM20,000 at a special interest rate of 2.5 percent annually to workers. The quantum of loan can be based on the applicant’s salaries. Repayments can be done through mandatory salary deductions if the government is worried that borrowers will default on repayments.

The proposed soft loans will go a long way to help lessen the everyday financial burden of the B40 and M40 workers during the crucial months when the full economic impact due to the viral outbreak is felt.

The money will come in handy to cover the workers’ needs and expenditure at a time when their income is reduced as a result of cost-cutting measures by employers.

The government can source funds needed by this scheme from blue-chip government-linked companies (GLCs) and banks. The GLCs and financial institutions must step forward to complement the government efforts to directly assist lowly paid workers as they are the most vulnerable group in any economic downturn.

We will be submitting this proposal today to the Finance Ministry and the Economic Affairs Ministry for their consideration. We also urge the government to ensure the loan application process is made easy and convenient and without collateral.

In conclusion, MTUC hopes the government will urgently consider the setting up of this special RM10 billion revolving fund to directly help B40 and M40 workers. They need their own stimulus package to mitigate the economic impact of the Covid-19 virus outbreak in the coming months.

The writer is the secretary-general of MTUC.

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