FMM PRESS STATEMENT: Extending the SOCSO Invalidity Scheme to Foreign Workers Aligns Foreign Workers Benefits With Those of Locals Ensuring Equal Treatment in Terms of Social Security

Head Office, KL

Kuala Lumpur, August 20, 2024 – The Federation of Malaysian Manufacturers (FMM) generally supports the decision of the Government to extend the Social Security Organisation (SOCSO) Invalidity Scheme to foreign workers which came into effect from July 1, 2024 as a positive move towards aligning the foreign workers’ benefits more closely with those of local workers and standardising/regularising the treatment of foreign workers to be in line with the local labour laws which mandates non-discrimination of workers.

The move by the Government to be in line with the ILO Convention No 118 on the Equality of Treatment (Social Security) is also seen as an initiative to improve its human rights protection in line with international standards, aimed at ensuring that all workers, regardless of nationality, receive equal treatment in terms of social security. By doing so, Malaysia is taking significant steps towards fulfilling its obligations under this convention and as an effort to enhance the rights and protections of all workers in the country, demonstrating a commitment to non-discrimination and equality in the workplace. Furthermore, this initiative can improve Malaysia's reputation in terms of human rights and labour standards. It signals to the international community that Malaysia is committed to protecting the welfare of all workers, including foreign workers who play a crucial role in the country's economy. By aligning its policies with international norms, Malaysia is also likely to gain favour with international bodies and attract more foreign investments, as companies are increasingly concerned with labour rights and ethical practices in their supply chains.

However, the extension of the Social Security Invalidity Scheme to foreign workers will come with additional cost to both employers and employees where the contribution would be an additional 0.5% of the employees’ monthly wages for the employer or estimated at around RM144 million a year (Based on 1.6 million workers earning at minimum wage rate of RM1500), bringing the employer’s contribution to 1.75% of the employees’ monthly wages while employees wound now incur a contribution of 0.5% of their monthly wages. Presently under the Employment Injury Scheme, only employers contribute 1.25% of the employees’ monthly wages. In this regard, it would be good for the Government to review all other insurance coverage mandated for foreign workers to ensure that there is no duplicate coverage including insurance coverage which are mandated by the source countries for their nationals. Overall, while the extension of the Social Security Invalidity Scheme to migrant workers is a progressive move towards inclusive social protection, it also presents new challenges for businesses that will need to adapt to the additional financial responsibilities including having to review their dependence on foreign workers given the increasing cost and obligations associated with employing foreign workers.

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Tan Sri Dato’ Soh Thian Lai

President, Federation of Malaysian Manufacturers

FMM Advocates Transparency, Integrity, Accountability and No Corruption

About FMM

The Federation of Malaysian Manufacturers (FMM) has been the voice of the Malaysian manufacturing sector since 1968. Representing over 12,700 member companies (4,000 direct and 8,700 indirect) from the manufacturing supply chain, FMM is actively engaged with government and its key agencies at Federal, State and local levels. FMM is also well-linked with international organisations, Malaysian businesses and civil society. Apart from benefitting from FMM’s advocacy, FMM members enjoy value-add services, including training, business networking and trade opportunities as well as regular information updates.

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