This article first appeared in Forum, The Edge Malaysia Weekly on May 8, 2017 - May 14, 2017

So Malaysia appears to be back in vogue. Thanks to the return of here-again, gone-again foreign capital, the FBM KLCI is roaring once more, this time heralded by spectacular gains among the small caps.

There has also been action in the ringgit too, despite all its travails. The local ­currency has stealthily grown into one of the region’s best-performers in the past month, enjoying a 2.5% advance against the US dollar (ahem: 30%, when annualised), though not for the reasons we would like to think.

Local growth, at circa 4%, is the envy of many developed nations (whose ranks we will join in three years, touch wood), while a diversification away from the traditional energy and commodity markets into services and consumption has been somewhat achieved.

But no, those are not the reasons behind the ringgit’s little passage upwards. Rather, it is the uneasy baptism of fire US President Donald Trump has laboured through in his first three months in office that put pressure on the greenback.

From volte-faces on his Mexican border wall and stance on China as a currency (and environment) manipulator to a not exactly revenue-neutral tax upheaval and a possible reinstatement of the Glass-Steagall Act, the president — who may have been consistent in his campaign promises — has enjoyed less luck in terms of seeing them through to actuality.

And that is not even mentioning the US’ nearly annual debt ceiling conundrum and ongoing fracas with North Korea, which might yet descend into a military conflagration.

All of which have only served to trouble the greenback and lift emerging market currencies, including the little ol’ ringgit.

Add weak US data (first-quarter GDP of a mere 0.7%, and March inflation of 0.3%) and suddenly, there is a higher chance of further gains in the ringgit if the Federal Reserve decides to dial back its timetable for two more 25 basis-point hikes by the year end.

But that is for now though. If there is anything the financial markets have taught us, empirically speaking, it is that the first four months of any given year are hardly an accurate indication of the remaining eight months — so let us not count them thar chickens yet.

Parachutes for retrenchees

In the wake of the Labour Day long weekend, the mainstream news flow began focusing on friendly plans for the Employee Insurance Scheme, which conceptually, at least, offers a safety net — a parachute of sorts — for retrenched workers.

It’s about time, I say.

Protection for private sector workers somewhat exists in the form of Social Security Organisation (Socso) benefits and individual employer-­employee plans. Failing which, there is always the industrial tribunal.

But the lower-paid rank and file — for whom the most support is needed — are for the most part ­unprotected when they lose their livelihood.

And when pressure on job security (job security? What job security?) is tenuous, at best (sic: economic woes and the Age of Automation), the introduction of such a scheme could not have come at a better time.

The problem is, under its current guise (it is in semi-nascent stage and is thankfully open to additional changes), the scheme only requires the ­worker and his employer to each pay a proposed 0.25% of the former’s salary.

And what about the government? Just ­

RM70 million in initial seed capital and no more.

Beyond certain Acts and policies on retraining and upskilling, surely more can be done by the ­administration, given how thousands of unemployed and henceforth non-contributing workers can ­adversely impact the economy.

What happened to the principle of mutuality?

According to the Malaysian Employers Federation, other concerns might conceivably centre on the management, governance and oversight of the excess capital of more than RM1.14 billion (average salary of RM2,800 x 6.8 million contributing workers x 0.5% x 12 months) that would be accumulated annually.

To wit: what will Socso (if it ends up as the appointed manager) do with the money? Who will be appointed to manage it? What will it “invest” in?

And with the various reports saying that on ­average, “only” about 40,000 workers — 0.6% of the workforce — are retrenched annually, it means that the majority of the workforce will be subsidising a tiny minority.

And more to the point, on a macro level, adding another layer of costs to businesses is akin to ­another dagger in the heart, what with the various challenges inherent, such as the Goods and Services Tax, income tax and rising cost of materials, labour, land, steel, petrol, food and so on.

As it often is, the country gets full marks for big plans and conceptual appeal. Unfortunately, it falls down in the execution and details.

As artificial intelligence and big data gain further traction and the tepid growth in our largest trading partners falters further, let us hope, fervently, that worker welfare is one area we can finally get right.

One thing is for sure: thousands of broke workers with hungry families are not a pretty sight.

Khoo Hsu Chuang is contributing editor at The Edge Malaysia

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