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PETALING JAYA: To support employment and ease the financial burden on companies, Prime Minister Tan Sri Muhyiddin Yassin announced the Salary Subsidy Program (Programa Subsidi Upah or PSU) under the Prihatin economic stimulus package in March 2020 .
PSUs are financial assistance programs paid to employers for local employees earning RM4,000 or less.
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Since then, the PSU 1.0, 2.0 and 3.0 programs have been continuously refined and expanded within the framework of the Penjana and Kita Prihatin economic packages, as well as the 2021 Budget and the Permai and Pemerkasa stimulus packages.
As of March 5, 2021, more than RM 14.4 billion had been channeled through PSU programs benefiting 2.7 million employees and more than 330,000 employers.
Sunway University Business School economics professor Dr. Yeah Kim Leng said this is a considerable contribution, given that there are an estimated six million employees and close to a million or more small and medium-sized enterprises (SMEs) in the country.
“The wage subsidies have evidently alleviated the economic difficulties caused by the recession,” he said.
Under PSU 1.0, which was for a period of three months, companies employing more than 200 people received RM600 per worker retained (capped at 200 workers).
Those employing between 75 and 200 employees earned RM800 per worker retained, while those with fewer than 75 employees earned RM1,200.
No conditions were established for companies with less than 75 workers.
The companies in the other two categories (size of the workforce) had to show that their income had decreased by more than 50% compared to January 2020 or later months.
Employers were required to retain their employees for at least six months, the three months during which they receive the benefits and the three months thereafter.
In January 2021, under the Permai package, the government announced that under PSU 3.0, all sectors, excluding tourism and retail, would earn RM600 for every employee earning less than RM4,000 for a month.
For the tourism and retail sectors, they would get RM600 per month for up to six months.
The government also raised the limit from 200 employees per application to 500 employees.
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In March 2021, Muhyiddin announced that according to Pemerkasa’s package, another RM700mil would be allocated to extend PSU 3.0 for another three months specifically.
The Prime Minister said this was to particularly help the tourism, wholesale and retail sectors, and businesses affected by the motion control order such as gyms and spas.
Meanwhile, Alliance Bank Malaysia Bhd chief economist Manokaran Mottain said the PSU programs had helped prevent widespread business closures in the short term.
“PSUs help to maintain the capital spending and cash flow of companies, support the well-being of employees until economic activities normalize and temporarily reduce the risks of long-term economic scarring and increased unemployment, in addition to maintain productivity growth, “he said.
Professor Yeah also agreed that the USPs, along with other direct and indirect financial assistance provided to businesses, had certainly helped avoid an economic recession that is worse than the 5.6% contraction of gross domestic product (GDP ), reduced the number of business closures and bankruptcies. , in addition to limiting the increase in unemployment to below 5%.
“The direct fiscal support provided by the government amounted to more than 4% of GDP.
“Including multiplier effects, a GDP contraction close to 10% would have been the consequence if the government had not mounted countercyclical support,” said Professor Yeah.
Manokaran said the PSU’s effectiveness in retaining jobs in tourism-related industries remains uncertain.
He explained that as of March 26, 2121, the wholesale and retail trade sectors had the highest proportion of employees who benefited from the PSU (20% of 899,065 employees).
Meanwhile, the President of the Federation of Manufacturers of Malaysia (FMM), Tan Sri Soh Thian Lai, said that the PSU has been fundamental for many companies and “remains one of the most popular and effective initiatives that the government has introduced to keep businesses afloat. “
Soh noted that the statistics on the adoption of PSU 1.0 and 2.0 and the steady increase in employment in the manufacturing sector since the third quarter of 2020 are testimonies that the PSU had helped companies, including those in the manufacturing sector, to maintain their businesses and keep jobs. .
Malaysian Employers Federation (MEF) Executive Director Datuk Shamsuddin Bardan also praised the UPMs, saying that “many more companies would have to close without the wage subsidies. Companies are doing their best to retain their employees despite the substantial loss of revenue due to closure restrictions. “
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