As the new mandatory Social Security Organisation (Socso) contribution policy looms on the horizon, set to come into effect on January 1 next year, hawkers and small vendors across Malaysia are expressing deep concern about its potential impact on their finances.
The scheme, introduced under the Social Security Scheme for the Self-Employed (SKSPS), aims to provide social security benefits to self-employed individuals, but many hawkers fear that the cost of compliance may outweigh the benefits.
The policy mandates that licensed hawkers and traders contribute a portion of their monthly wages to Socso. Employees under 60 are required to contribute 0.5% of their monthly wages, while employers must contribute 1.75%. For those over 60, only employers are obligated to contribute, at a reduced rate of 1.25%.
For hawkers like Lim Huat Tat, who represents hawkers in Kuching and Samarahan, the scheme's objectives are clear, but the practical challenges cannot be ignored. Many hawkers, he points out, are advanced in age or have limited education, making them particularly sensitive to any policy that threatens to strain their already tight budgets.
"These hawkers won’t be interested unless the costs are low," Lim remarked. He stressed that if the contributions are expensive and don't provide adequate coverage, they are unlikely to take part.
Tan Chnan Yeang of the Malaysia-Singapore Coffee Shop Proprietors’ General Association echoed Lim’s concerns, warning that small vendors, especially those operating on thin margins, will feel the pressure. Tan urged the government to introduce policies that would help ease their transition to the new system or consider granting exemptions. He called for increased support to lighten the load on these small-time entrepreneurs.
Meanwhile, Tey Tian Hwang, Chairman of the Johor Bahru Small Business Association, pointed out that while the policy could benefit those without any existing insurance, several aspects of the scheme remain unclear. Tey suggested the government take a lenient approach with hawkers while encouraging compliance. He added that working with trade unions would be essential for effectively spreading information about the scheme.
On the other hand, some hawkers, like Chai Hoong Sang from Petaling Jaya, are in favor of the scheme, recognizing its potential to provide much-needed support for employees who otherwise could not afford medical insurance. Chai explained that this would enable employees to seek financial assistance from Socso in case of an accident, urging hawkers to join the scheme as part of their social responsibility.
Despite the mixed reactions, Socso has announced that it will begin working with local governments to raise awareness about the scheme in the coming months. However, the challenge remains in addressing the concerns of hawkers who fear that the contributions may prove too costly, particularly in light of high employee turnover rates, as highlighted by Lee Ngim Siong, a manager at the Rock Cafe hawker center in Bandar Sunway.
Although this is the third sector required to make mandatory contributions under the SKSPS scheme, following the transport and food delivery sectors, hawkers are seeking greater clarity and support from the government.
The question remains: will this policy provide hawkers with the financial security they need, or will it become yet another financial hurdle in their challenging line of work?
By: Kpost
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