Home Civil Society Voices 2010 Civil society voices Proposed labour law amendments draw flak

Proposed labour law amendments draw flak

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It is clear that it is the corporate agenda – and  not the needs or welfare of the workers – that is driving the proposed amendments to labour laws, asserts S Arutchelvan.

Parti Sosialis Malaysia is proud to be in a coalition to oppose the draconian Amendment to the Labour Act which has been described by many as the worst in 40 years.

Over the years, there have been many amendments to our labour laws and each of these amendments were done to cater for the needs of the profit-oriented investors. Today, Malaysia practises cheap labour policy while aspiring to become a high income society.

Currently, a certain portion of the Employment Act is poised for its second reading in Parliament in the October sitting while there have been plans to amend three other laws – The Industrial Relations Act 1967, The Employment Act 1955 and the Trade Unions Act 1959. Each of these amendments is designed to please foreign investors and will further erode workers rights

PSM along with many other respected groups including the MTUC, The Bar Council, Jerit, Suaram, and leading women and students groups call upon the Minister to immediately stop the proposed amendments to the labour laws during the coming parliamentary sitting.

Instead we call upon the Government to pass and implement laws and policies which have been long requested by the workers especially the retrenchment fund, Minimum Wage Act and  the automatic registration of trade unions. In recent weeks, the government had said that it would be implementing the Minimum Wage Act next year, but PSM is not convinced. There is simple a lack of political will and it has been the practice of the Government not to implement laws which are opposed by the employers federation.

We see this amendment as pitting the majority workers in this country against the minority capitalist companies who seem to be calling the shots. Sadly, this government unabashedly continues to bow down to please foreign investors, perpetuate the neo-liberal regimes and play to the tune of its political masters.

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A study by the Human Resources Ministry on wages in the country revealed that almost 34 percent or about 1.3 million workers earned less than RM700 a month. The Minister also cited a World Bank study which discovered that the wage trend in Malaysia had only recorded a 2.6 per cent growth annually over the past 10 years compared with the increasing cost of living during the same period. The Minister further stated that the Market cannot be trusted entirely.

But the current amendments are truly playing to the needs of the corporate sector and the market rather than to the rakyat.

The biggest amendment is on the definition of the term employer and the contractualisation of labour.  The proposed amendment recognises a new category of contractor – that is, the Contractor of Labour, whose job is merely to supply labour. Previously, the ‘contractor’ was also part and parcel of the work of the principal. Now this amendment recognises the Contractor of Labour as the ‘Employer’ rather than subservient or responsible to the principal. These changes will surely make it easier to summarily lay off workers. In short, the principal can escape from paying benefits because these wage earners are not his workers.

This amendment, if passed, will be the mother of all amendments as it will take away whatever little protection the workers have and will kill off the trade union movement and bring an end to permanent work and job security.

Among other amendments on the Employment Act are the period of notice of Termination of Contract (Section 12), Section 19 – Time of Payment of Wage,  Section 25A – Payment of Wages through Bank, Section 34 –  Prohibition of night work, Section 44 and Section 61 on the need for a register of allowances paid, and Section 60A – Hours of Work.

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Under the proposed amendment to the Industrial Relations Act 1967, the proposed amendments to Section 20 – Representations on dismissals will now exclude employees with less than one year of service, employees earning a basic salary of RM10,000 or more and employees on a fixed term contract.

Besides the amendment to the Employment Act and IRA, there seems to be further plans to curb trade union activities. Under Section 5(2)(B), Executive and Security categories are now prohibited from becoming members of trade unions; besides that, there are plans to empower the DGIR to review the status of unions which have been given recognition upon request after a minimum period of five years. The proposed amendment will enable employers to perpetually deny workers collective bargaining rights

The modus operandi of the Najib government is clear. It is all out to implement neo-liberal policies. Its NEM and its RMK10 plans to make Malaysia a high income society by 2010. How is this possible, when the agenda in hand is to implement GST (Goods and Services Tax), lower subsidies, reduce the government’s role and enlarge the role of the private sector. A move which will definitely lead to more neo-liberal policies to the detriment of the poor – increasing FDI (Foreign Direct Investment) – which can only be carried out by regulating our market, depressing wages, and tightening labour control/laws. It is clear that it is the corporate agenda that is driving these amendments, not the needs or welfare of the workers.

We see the Ministers recent announcement on part-time work as yet another ploy to portray the government as assisting workers. But in reality, it is an exercise to assist the employers. Labour flexibility goes against the notion of job security. In the first place, why must workers work part-time jobs if their principle work can afford to pay them sufficiently? Who is going to pay for the social cost of the overworked worker and the shattered family institution?  In the long run, the companies will do away with permanent jobs as it is easier to employ part-time workers as part-time workers are more vulnerable to be exploited and they can be given less benefits.  It will be also an avenue to further smash the trade unions. The only benefits will be part-time workers will be paid EPF and Socso. It is ironic because every worker should be protected at all times during her or his employment.

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In view of all this, PSM calls for the following:

Stop tabling the proposed anti-labour legislation.

– Stop all amendments to our labour laws which are eroding workers rights

– Introduce law that provide for a retrenchment fund, a minimum wage, the automatic registration of trade unions, and priority of wages and termination benefits over other debts (to override the Companies Act)

Introduce immediate steps to narrow the gap between the rich and the poor.

– Introduce a Minimum Wage Act

– Reduce subsidies to industries and businesses but maintain subsidies for the poor

– Stop all measures to implement the GST and maintain or increase the corporate tax

Review the government’s fundamental philosophy. The Tenth Malaysia Plan calls for a major role to be played by the private sector. It is proven that it is the social and political responsibility of the State to ensure the well being of its workers and the rakyat. We call on the Government to safeguard key public sectors and provide for

– public hospitals and the health care system
– a free and affordable public education system
– affordable and decent homes
– efficient and cheap public transport

S Arutchelvan is Secretary General of Parti Sosialis Malaysia

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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7 Oct 2010 1.33am

bangsarboy, you are dreaming if you think that employers are going to pay workers more if direct corporate taxes are reduced. The amounts saved are more likely to end up as higher profits and higher dividends for shareholders. Lower corporate taxes and lower income taxes at the higher bands will benefit the rich, who will get even richer. Meanwhile, with direct taxes reduced and to make up for the shortfall in govt revenue, the tax burden will be shifted to the poor/lower-income group in the form of indirect taxes (GST). Yes, GST may be only 4% for a start, but that’s to lull us into thinking the tax will not hurt the ordinary person on the street. But wait till the rates are gradually increased in the years to come. How much is it in the UK now, huh? 17.5%! Meanwhile, big accounting firms and tax consultants will make a lot of money holding seminars and advising their clients on how to implement GST. Yeah, right, it’s to help the poor workers. GST may work in more developed countries where most workers pay income tax and… Read more »

6 Oct 2010 11.58pm

Dont you think the idea should be to implement policy change that will allow employers to put more money into the hands of workers? In order to do so, Malaysia needs to get competitive! To do so require systemic change in government policy. Lower corporate taxes to allow employers the ability to pay workers higher wages, then get rid of the archaic sales + service tax regime which is costly + an additional burden to businesses and replace this with a GST at a lower rate of 4%. This should enhance a company’s competitiveness and further reduce the cost of doing business. The GST wont automatically mean higher prices. Take this example: today a new / used car attracts a 10% sales tax, yet the proposed GST would tax that same new / used car at 4%. That should result in a 6% savings.
Malaysia needs to grow up and adopt a modern, efficient tax system that raises the revenues required to pay for the programs the population deserves and stop relying on petronas to simply pay for everything.

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