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t unemployment could deteriorate not only the population’s welfare but as well as the country itself. Furthermore, according to Kugler (2002), a study has made showing that the withdrawals from unemployment insurance savings account cause an increase of consumption level by unemployed household in Colombia.

Martin Borowing & Thomas Crossley (1996) discovered the impact of unemployment benefits to household welfare through the chain below. In general, their research study has concerned and included the overall link from unemployment benefits to its expenditures. As the result, they found out that a 5 percent cut in unemployment benefits level will cause an expenditure fall by 0.3 percent. The unemployment benefits as a major income for unemployed household have significantly larger falls in consumption. Also, some of the studies have been reviewed. For instance, the author reviewed Kell and Wright (1990) and Lundberg (1985) studies which were the relationship between personal income and household income depending on the reaction of earnings by other family members.

Unemployment Insurance benefits Personal Income Household Income

Household Expenditure Household Utility Level

However, Malaysia does not have any unemployment benefits system but the government has prepared a several types of welfare benefit system.

2.4.1 Severance Pay

Severance pay, in Malaysia, is regarded as a form of unemployment-related benefit for both employers and employees (Eva Liu, Walter and Kwong, 2000). Those workers, whose earnings which are not exceeding RM 1500 per month, irrespective of their earnings are covered under the employment Act 1955, will be provided for severance pay. Severance pay is known as retrenchment benefits, or termination and lay-off benefits in Malaysia. The rate is paid at the following rates:

10 days, 15 days, 20 days wages for each year of service for an employment shorter than two years, longer than two years but shorter than five years, five years or longer, respectively.

Severance pay is expected to be sufficient to meet the basic need of an unemployed worker until the next job is found. But, one must be clear that, severance pay is not equivalent to unemployment insurance or unemployment assistance.

Recipient employees do not need to have any prior contribution, neither the recipient employees are required to be able to work, nor willing to working or in the mode of finding work, in order for him to receive severance payment. Severance pay is made to an employee solely on the basis of termination of contract by the employer.

2.4.2 Employees Provident Fund

The Government has set up the Employees Provident Fund (EPF), a social security organization that provides retirement benefits to private sector employees and non-pensionable public service employees.  Under the Employees Provident Fund (EPF) Act 1951 (Malaysia,1951), it is compulsory for all employers and employees to contribute towards this Fund. Employer need to contribute 12% for his employee's EPF at the same time, employee need to contribute another 11% for himself from his monthly wages into his EPF savings.

This fund provides benefits for old citizens, disability and death. Nevertheless, it does not provide cash assistance to any employee who is unemployed and the money can only be withd本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。