GEORGE TOWN: An economist believes wage subisidies are a more effective measure in helping businesses weather the prolonged impact from the Covid-19 pandemic, compared to cash handouts.
Dr Lim Mah Hui said in its recent stimulus package, the government allocated a RM600 wage subsidy to each employee for up to three months provided they are kept on the payroll.
Howeve, a huge chunk of the fiscal injection is being used to directly give cash handouts to the B40 and M40 households, receiving RM1,600 and RM1,000, respectively.
Lim opined that administratively, it is more efficient and easier to pay directly to thousands of firms or through their EPF accounts, than to the millions of households and individuals.
He also called upon the Finance Ministry to channel more of its RM250 billion stimulus package towards the small medium enterprises (SMEs) and to groups which can boost domestic consumption.
“If half of SMEs fold up, supply of goods and services would be severely disrupted while demand increases. This would result in inflation, something we don’t want right now,” Lim said.
