Strengthening Worker Protection: Increase in SOCSO Wage Ceiling from RM5,000 to RM6,000
Effective October 1, 2024, PERKESO (Malaysia’s Social Security Organization) has raised the wage ceiling for contributions from RM5,000 to RM6,000 to enhance worker protection. This adjustment, based on the Third Schedule (Act 4) and Second Schedule (Act 800), applies to employees earning more than RM5,000 per month.
Contributions and Benefits Under the New Wage Ceiling
- Wage Ceiling Application: For employees earning more than RM6,000 per month, contributions are calculated based on the new ceiling of RM6,000. This adjustment implies increased contributions from both employers and employees.
- Contribution Calculation:
◦ Employees earning RM6,000 or less per month: Contributions are calculated based on the actual salary.
◦ Employees earning more than RM6,000 per month: Contributions are capped at RM6,000.
Enhanced Financial Protection
With this adjustment, SOCSO aims to provide greater protection and benefits to employees in various situations:
- Workplace Accidents: Coverage for medical expenses and compensation related to workplace injuries.
- Occupational Diseases: Support for illnesses caused by work-related activities.
- Disability Benefits: Expanded payouts for temporary or permanent disabilities.
- Survivor Benefits: Additional financial support for dependents in the event of a worker’s death.
Example: Under the previous RM5,000 ceiling, employees earning above RM5,000 received the same level of benefits. With the revised ceiling of RM6,000, higher-income employees can now receive increased payouts for workplace accidents or illnesses. For instance, the maximum compensation for workplace injuries could rise by approximately 20%, ensuring better financial stability for affected workers.
Broader Impact on Social Protection
- Expanded Coverage: According to SOCSO data, approximately 18% of Malaysian workers earned more than RM5,000 per month as of 2023. This adjustment is designed to benefit over two million workers, including higher-income earners.
- Strengthened Employer Responsibility: With increased employer contributions, businesses can more effectively fulfill their obligations to protect workers under SOCSO.
Contribution to Economic Stability
The revised wage ceiling is expected to enhance economic stability for Malaysian workers in the following ways:
- Emergency Preparedness: Strengthening financial safety nets for unforeseen accidents or illnesses.
- Long-Term Retirement Security: Additional contributions contribute to the sustainability of the social security system, ensuring better post-retirement stability for workers.
- Economic Growth: Improved worker protection fosters higher productivity and stimulates the national economy.
Raising the SOCSO wage ceiling to RM6,000 represents a significant milestone in strengthening Malaysia’s labor market sustainability and worker protection. This policy not only ensures that workers benefit from enhanced social security in line with economic growth but also underscores the government’s commitment to safeguarding the financial and physical well-being of its workforce. Furthermore, it is expected to encourage collaboration between employers and employees to create a safer and more stable working environment.