On Thursday, Malaysian Prime Minister Datuk Seri Najib Abdul Razak announced that the employment insurance system (EIS) will be introduced to help local workers in the private sector, as reported by The Star.

The new scheme will benefit 6.5 million private sector employees and is set to be implemented on 1 January 2018. The payout, however, will only commence on 1 January 2019.

According to The Star, a new law is currently being drafted for the scheme and will be tabled in the parliament in June.

PM Najib expressed his confidence that this scheme will bring long-term benefits for both employees and employers.

He also added that similar policies have been introduced in other countries and have shown that it has the capability to "help stabilise the economy and help sustain economic activities in a country” especially during economic crisis.

"With the EIS, labour market efficiency could be improved through efficient matching of supply and demand, thereby improving productivity and industrial competitiveness," he was quoted by the news agency as saying.

The EIS was announced in the Budget 2015.

Say, you've just been laid off at work. It might take you weeks - or even months - to look for a new job. So, where do you find the money to pay for bills until you land a new job?

This is where the EIS comes into play.

According to PM Najib, the EIS is a financial scheme aimed at helping employees who have lost their job.

It acts as a social “safety net” to provide financial help and assistance for workers who are in the midst of looking for a new job.

Employees will also be given training courses to either help improve their skills or help them learn new ones to help increase their employability.

Apart from training, workers will also be provided with career counseling and even job-hunting assistance.