Home 2012: 6 Workers’ and trade union rights in BN-ruled Malaysia (Part 2)

Workers’ and trade union rights in BN-ruled Malaysia (Part 2)

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Under this pro-business BN government, trade unions have been weakened and workers’bargaining powers eroded, writes Charles Hector.

Photograph: Jerit

As of January 2012, the employed labour force in Malaysia was about 12.4m. Out of this, only 798,941 workers (6.44 per cent) are members of trade unions, of which about 53 per cent are private sector workers, 38 per cent public sector workers, and 9 per cent workers of statutory bodies/local authorities, after more than 50 years of independence.

It is obvious that this Malaysian government has not been actively promoting the formation of trade unions. In fact, its more recent policies seem directed towards the weakening of trade unions. Electronic workers, for example, have still not yet been allowed to form a national union. The only concession made after years of struggle was when the BN allowed the formation of four regional unions in the Peninsula in 2010 (The Star, 1 May 2010).

The perception amongst workers is that this government has favoured unions that represent workers in the public sector, statutory bodies and local authorities, who have enjoyed wage increases, cost of living allowances (Cola) and other benefits. The primary motive, however, may not be acknowledgement of the rights and welfare of workers; instead, it is to woo these workers to support the Umno-led BN coalition. That said, the perks and ‘special treatment’of these workers just prior to elections does not necessarily translate into blind loyalty to the BN cause. For today, the people, including workers in the public sector, have awakened from their slumber, thanks to the availability of more information via the alternative media and exposure to the global media. Hence, they will vote in the upcoming elections as they please!

Another reason for the declining number of workers involved in the trade unions is the growing use of short-term contract employment, temporary and/or casual employees at the workplace. Such short-term and temporary employment which can be terminated by not renewing the employment contracts have made such workers disinclined to form, let alone join and actively participate in, trade unions. The fact that unions often hold general meetings and elect their leaders once every three years, further discourages short-term contract workers from active participation in the unions.

Trade union membership in Malaysia 2006-2012

Source: Department of Trade Union Affairs website

Compounded with this is the emergence of a new class of workers commonly known as ‘outsourced workers’, who are not considered employees of the principal or owner of the workplaces. As such, they are not allowed to join in-house unions or even regional/national unions. As well, they cannot resort to Collective Agreements, since these are agreements between employers and direct worker-employees. With no law limiting the percentage of ‘outsourced workers’working at a particular workplace, they can account for up to 50 per cent of total workers in some factories.

The Trade Union Act also provides that when a worker has been terminated, he/she automatically will cease to be a member of the trade union. At a time like this, when a worker really needs the support and assistance of the trade union, he/she is legally deprived of union membership.

In this regard, there have been an increasing number of cases wherein active union leaders have been dismissed. Often, the reason advanced by their employer is that they have brought disrepute and/or insulted the management of their employer-company – eg, Hata Wahari, the president of the National Union of Journalists, and more recently Chen Ka Fatt and Abdul Jamil Lalaludeen, respectively, honorary treasurer and vice-president of the National Union of Bank Employees (Nube) were dismissed. In the latter two cases, the Nube leaders apparently had participated in a rally outside the United Nations building in Geneva where they carried a banner declaring “Maybank robs poor Malaysian workers” (Harakah, 7 Feb 2012). Workers should not be terminated, save by reason of non-performance of their job and/or some infringement/breach at the workplace or related to work. It is wrong to start dismissing workers because they criticise their employers.

Erosion of the right to permanent employment

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Permanent employment is a basic right, essential for the well being and welfare of workers and their families. One’s employment usually determines where one will settle-down, buy homes and land, where onefs children will go to school and even where onefs spouse will find employment. With short-term contracts increasingly the practice, it is stressful for the worker not knowing whether at the end of his contract period, he or she will still be employed at the workplace.

In our employment laws, what was clearly envisaged was permanent employment until retirement. Accordingly, the Employment Act 1955 contains clauses that provide for gradual increases in entitlements to annual leave, sick leave and even the calculation of termination and lay-off benefits. Even when it comes to retrenchment, there was the Last In First Out (LIFO) policy, that protected workers with longer periods of service. Indeed, the law imposed the obligation on employers to first attempt to provide alternative employment within the workplace, before having to let an employee go.

This right to permanent employment has systematically been replaced with short-term or fixed duration contracts of employment, sometimes less than one year, with no guarantee or safeguard of a renewal of employment contract even if the employer still needs workers at the end of the contract period.

For those, who already are permanent employees, employers have used various means to destroy this relationship and to replace it with short-term contracts. One method used is the outsourcing of work to third parties: forcing employees to leave and to enter into a new contract with these new third party employers, or face retrenchment.

Another method employed in Malaysia is the Voluntary Separation Scheme (VSS). Ironically, many workers have lost permanent employment and only to be re-employed by the same employer, this time as short-term contract workers.

Public sector employees also lost permanent employment with pension rights when state entities were privatised and this continues to happen.

Employers now can very easily get rid of workers who are older, ‘problematic’ (because they are demanding rights or even getting involved in union activities), pregnant or partially disabled following an industrial accident. Or they may just not offer them a new contract of employment. This effectively diminishes significantly the workers’ ability to fight for better wages, working conditions and other employment benefits.

The provisions for employing temporary or casual workers also gives the Minister the power to reduce workersf rights guaranteed by the parent Act for these workers.

Having different classes of workers at the workplace strengthens the ability of employers to ‘divide and rule’workers – hence greater power to control workers while eroding the workers’ability to demand better rights.

‘Bonded’ migrant workers

Initially, the Malaysian government created Free Trade Zones near the bigger towns, and workers from all over the country came to work. As time passed and wages remained low while the cost of living rose and the quality of life declined, workers started moving back to their home towns and new workers were less inclined to come.

The government then allowed these factories to be established all over Malaysia, especially where the workers and their families resided. Today, there are over 200 industrial estates, free commercial zones and free industrial zones spread all over the country.

As time went on, Malaysian workers demanded higher wages and better working conditions. Instead of facilitating these demands, the Malaysian government came to the assistance of employers by bringing in more controllable and cheaper labour, namely, the migrant workers, who were obliged to work for one employer only which, invariably enabled employers to oppress these workers. After all, if the migrant workers were dissatisfied, the only choice they had was to quit and return to their home country. In fact, even this is not a real option – for these workers would have spent a lot of money and incurred debts when they chose to come to Malaysia as migrant workers.

Access to justice is available to migrant workers just like any other worker, but when they complain of rights violations or start using these legal mechanisms, the response of many employers is simply termination of their employment: work passes/visas would be cancelled, disallowing the workers to legally remain in the country. Hence, they would lose any right to pursue their claims in the Labour Courts or via other avenues. If they stay on in the country ‘illegally’, they risk being arrested, detained, charged in court, convicted, whipped, and thereafter deported. The fact that they have valid claims or have lodged complaints in relevant avenues for justice is irrelevant.

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Hence, migrant workers became a preferred source of labour for many employers – bonded and forced to work for the one employer, so very easily forced to work overtime, denied rest days and even public holidays.

Fortunately, there has emerged some measure of workers’ solidarity and Malaysian workers and trade unions, including the MTUC began to accept migrant workers as workers, and started fighting for the rights of migrant workers too. The unions accepted migrant workers as members of trade unions, irrespective of the fact that one of the conditions of these migrant workers’work passes/visas denies them the freedom of association. The unions, including the MTUC, have been ready and willing to take the matter to court if any employer, or the Malaysian government, contests the right of migrant workers to join unions or to benefit from Collective Agreements.

Besides migrant workers, the Malaysian government also created other classes of workers – temporary and casual workers. Such different categories of workers kept them divided and prevented them from joining existing unions.

Using labour without entering into employment relationship

In fact, short-term contract workers, migrant workers or the other types of workers are employees of the factory and workplaces they work in. Hence, employers have duties and obligations to ensure that the rights and welfare of these worker-employees, as contained in existing national laws and in collective agreements, are provided for.

Alas, in 2005, the Malaysian government came up with a policy that allowed factories and workplaces to use workers, without having to enter into any employment relationship with these workers. A new entity was created called ‘outsourcing agents/companies’, who would be labour/manpower suppliers, who would be supplying workers to factories and workplaces.

Under the Private Employment Agencies Act 1971, private employment agencies are considered the employers of these workers, and will continue to be the employer of the workers even after they start working in particular factories and workplaces. These workers are commonly known as ‘outsourced workers’.

In contrast, the ‘outsourcing agencies/companies’ are not considered to be the employers of these outsourced workers. Significantly, it was not the Ministry of Human Resources but the Ministry of Home Affairs that issued the licence/permits to these ‘outsourcing agents/companies’.

In this regard, I believe that this new Act runs contrary to the spirit of existing laws and principles. In the beginning, this practice applied only to migrant workers. It was later extended to cover local workers too. Consequently, in some factories today, about 50 per cent of the workforce is made up of these ‘outsourced workers’ who are not employees of the factory and/or workplace. Accordingly, they cannot join workplace unions and/or benefit from Collective Agreements either.

The ‘outsourcing agents/companies’ set-up is a very profitable business with little or no risk, even from their ‘employees’, who even if they were to strike would not affect these labour suppliers (‘contractors for labour’). After all, they do not run factories; indeed, there is no work that needs to be performed in order to generate profits. This is a form of what might be called ‘rentier capitalism’!

In 2010, the Malaysian government took steps to give statutory recognition to this unjust employment practice and relationship. They wanted to give legal recognition to these ‘contractors for labour’ – these labour suppliers. They wanted to confirm that the ‘contractor for labour’ is the employer, and remains the employer of these ‘outsourced workers’ even after they start working in the workplaces of principals. All this was achieved, despite strong protests coming from workers, their unions, MTUC, civil society groups not just within Malaysia but also internationally. The amendments proposed was passed and came into effect on 1 April 2012.

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The use of ‘outsourced workers’ or outside workers at workplaces by principals are growing, and it also happens in government-linked companies. For example, the TNB Junior Officers Union protested in early 2012 against the employment and use of eoutsourced workersf by TNB.

The Minister of Human Resources recently announced an exemption of some (but not all) of the recent amendments concerning ‘contractor for labour’ to all sectors except the agricultural sector. In fact, it was just a reaffirmation of ‘contractors for labour’ and the continued use of ‘outsourced workers’by principals who do not consider them as their employees.

There is no doubt that such arrangements run contrary to the sentiments and principles governing employment relationships of the International Labour Organization. Our own Employment Act also clearly states that ‘the person or class of persons employed, engaged or contracted with to carry out the work shall be deemed to be an employee or employees and (a) the principal or owner of the agricultural or industrial undertaking, constructional work, trade, business or place of work; or (b) the statutory body or local government authority, shall be deemed to be the employer’. Rightfully all involved in the business of finding and supplying workers must be private employment agencies, governed by the Private Employment Agencies Act 1971, who for their services will be paid a fixed one-time fee. They will thereafter have no other relationship, let alone employment relationships, with the workers after they are accepted and start working for the principal. The workers will then become the principalfs employees. Hence this provision for ‘contractors for labour’ is totally against the spirit of our own Employment Act!

The MTUC and workers have continued to protest against this provision for labour contractors. In 2012, the Malaysian Bar passed a Resolution unanimously calling for the maintenance of a two-party employment relationship between workers and the principal to the exclusion of all thid parties, especially the ‘contractor for labour’. Regardless of whether they are called labour/manpower suppliers or outsourcing companies/agents, there must be just one class of workers – all of whom are employees of the principal – who can join the unions at the workplace and fight as one for better workers’ rights and benefits.

The way forward

The BN government seems to have lost its way and abandoned its duties and obligations to improve the rights and welfare of persons, workers and their families. Slowly but surely workers’ and trade union rights have been eroded. The government needs to stop being pro-employer and pro-business, concerned only with big profits. It must do what is needed immediately to restore the rights of workers to permanent employment until retirement, to strengthen trade unions, which is an essential tool for the protection and improvement of the livelihood of workers, and most importantly to maintain the two-party employment relationship.

In the upcoming elections, Malaysian workers and their families will again have the opportunity to get rid of this BN government and let a new coalition form a new government in the hope that a new government will reverse this erosion of workersf and trade union rights. The choice ultimately rests with the people and the workers. Our concern must not be driven by self-interest based on workplace or sector, ethnicity, nationality, religion, culture or even current political affiliations, but by a concern for the future common good and best interest of all persons and their families – which includes the over 10 million workers in Malaysia.

Charles Hector is a human rights lawyer based in Temerloh. Part 1 of this article appeared in the previous issue of Aliran Monthly.

The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

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C. Alfred
27 Aug 2012 9.37am

There is erosion of workers rights because of selfish union leaders who want to cling on to power as long as they can. There are leaders who have been there for more than two decades. These leaders do not even educate their members on the rights of employees. Those who oppose the leadership are expelled from the Union without being accorded natural justice.

Members of the Union who are dismissed from service are not even given legal aid and they have to fend for themselves.

How can Unions have the power to negotiate when they do not employ good researchers, financial experts to negotiate with employers. Unionists do not use brain power but muscle power to take on the employers. There needs to be a shift in the thinking of the unionists if they want to improve the living standards of their members. Mediocre leaders have no business to be the leaders to lead the workers.

Ronald Benjamin
26 Aug 2012 9.29pm

Workers rights under Barisan National have eroded over the years due to weakening of trade unionism.I agree with the author that there is weakening of bargaining power of the workers. The question is does the weakening of bargaining power the only reason of erosion of workers rights?There is another aspect that is not spoken about by rights advocates,since some of them have no experience in the corporate world such as importance of workers education.Many malaysia workers are not only unskill but lack the right attitude towards work and education besides lacking the awareness on the importance of self reliance.In countries like Venezuela,there are factories run by workers with the absends of capitalist.Are our workers having the occupational skills and knowledge to bargain effectively with employers? Having a numerical strenght alone is inadequate in this current knowledge and skill driven world. This are areas that needs to be addressed.Mere change of Government will not solve the underlying problem.Pakatan Rakyat has not clearly stated that they would oppose neo liberalism.

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