40% of 17 million workforce not covered by EPF

The latest EPF dividend rate, announced today, shown on a lobby display screen. (Bernama pic)

PETALING JAYA: Only 60% or 10.2 million of the 17 million labour force are covered by the Employees Provident Fund, its CEO Ahmad Zulqarnain Onn said, adding that the percentage was “worrying”.

Zulqarnain said the figure was also low when compared to the global average of 68%, Astro Awani reported. In comparison, only 49% of the workforce in Thailand and 43% of the workforce in Vietnam are protected, according to EPF data.

“The majority of the workforce that are not protected are those in the informal sector, including freelancers and those who are self-employed like gig workers,” he was quoted as saying.

According to EPF data, an employee who earns a minimum wage of RM1,500, with an annual salary increase of 3% would be able to save RM479,000 by the time they reach the age of 55.

Of the 4.1 million workers in the informal sector, three million were those with their own accounts, while 582,000 were business owners. The remaining 494,000 were unpaid family workers.

Zulqarnain said the “drastic” upward trend in the gig sector would cause the workforce in the informal sector to increase to 33% by 2040 from the current 26%.

The workforce in the formal sector is expected to drop to 37% from the current 42% in the next 16 years.

Zulqarnain said the situation was worrying in view of the fact that Malaysia is expected to become an aged nation by 2043 and a super aged nation by 2057.

“And the birthrate dipping by 1.6% in 2023, would see Malaysia become an aged nation a lot faster.” By 2043, about 14.9% of the population, or 39.9 million would be aged 60 and above, while the birth rate would drop to 6.6 million babies being born.

Zulqarnain said that at the current trajectory, Malaysia was ageing at a faster rate than developed countries such as the UK, France and Australia.

The government needs to prepare the infrastructure, services and jobs to support this phenomena, he said.