A memorandum, endorsed by 101 groups, was sent to the prime minister on 15 February 2016, calling on the government to reconsider the levy increase and to ensure that it is imposed on employers, not workers.
We, the 101 undersigned civil society organisations, trade unions and groups are shocked by the news that the Malaysian government is increasing the migrant worker (foreign worker) levy to more than double the current rate, which since January 2013, had to be paid by the migrant workers themselves.
Prior to that, it was paid by the employer of migrant workers, whereby the introduction of the levy then was to deter employers employing migrant workers, rather than local Malaysian workers. This was also stated by the then Malaysian labour director general, Ismail Abdul Rahim, who was quoted as saying that “the rationale behind getting employers to bear the levy was to discourage them from employing foreigners…” (The Star, 16 April 2009).
Migrant worker levy rates drastically increased as of 1 February 2016
The Malaysian government recently announced that, as of 1 February 2016, the annual levy payable for each migrant worker is increased to RM2,500 (manufacturing, construction and service sectors) and RM1,500 (plantation and agriculture).
Before this, the annual levy payable for a migrant worker in the manufacturing sector (RM1,250), construction sector (RM1,250), plantation sector (RM590), agricultural sector (RM410) and services sector (RM1,250–1,850) was so much lower.
This new rates in comparison greatly burden the migrant worker in that the annual levy payable per migrant worker will now be doubled or even tripled. For example, a migrant worker in an electronics factory, classified under the manufacturing sector, who paid a levy of RM1,250 before, will now have to pay double, RM2,500. A worker earning a monthly minimum wage of RM900, which is the wage many migrants are paid, will now have to pay more than RM200 for levy, leaving them with only less than RM700 as their monthly wage, not taking into account all other wage deductions. This is most unjust.
It is unconscionable for the Malaysian government to target migrant workers in the hope of making an extra income of RM2.5bn for the country from the 2.1m documented migrant workers in Malaysia to rescue Malaysia from its current financial woes.
Easily exploited with almost no access to justice makes migrant workers vulnerable to employers
When Malaysia, introduced a minimum wage, employers and employer groups complained that their labour cost had gone up and they could not afford it. In response, the Malaysian government decided that employers no longer need to pay the migrant workers levy; thus the obligation to pay the levy fell on migrant workers themselves.
Contract substitution remains a problem. Migrant workers agree to come to work in Malaysia, but when they start working, the migrant workers complain that they are now paid lower than what they had agreed to in their country of origin with the employer and/or his agent. Many employers have also used the minimum wage of RM900 as the standard wages they pay migrant workers.
Because of the debt incurred by migrant workers in coming to Malaysia to work, which is about RM5,000, and the practice of employers and/or agents holding on to their passports and work permits, migrant workers find themselves in a form of bonded labour, not able to do anything else but just survive.
With the very low wages they receive, many are forced into doing overtime sometimes four hours per day, working on rest days and even public holidays to make ends meet. Malaysian law stipulates a draconian overtime limit of 104 hours every month.
This means, in effect, migrant workers can be forced to work for 12 hours a day because in many workplaces doing overtime is no longer an option that workers can refuse. As such, migrant workers and even local workers can be considered to be engaged in some form of ‘forced labour’.
For migrant workers, access to justice remains a myth for many. When they complain about rights violations, what happens in many cases is that they are terminated, and their permit to work and/or remain in Malaysia is also terminated. This causes migrant workers to be easily controlled and exploited cheaply. They do not even have the option to claim justice.
Employers contribute less to migrant workers’ income
Under Malaysian law, employers are required to contribute 13% of the monthly income, inclusive of overtime earnings, to the Employees Provident Fund. But this requirement is not applicable to migrant workers. This makes migrant workers cheaper.
Further, since many employers do not take in migrant workers directly as their own employees but take and use them as workers who are supplied by labour suppliers – legally known as the contractors for labour – it effectively prevents these supplied migrant workers the right to join in-house trade unions.
Even if they do join national/regional unions, they simply will not be able to enjoy the extra rights and benefits that come by reason of a collective bargaining agreement between union and employer, simply by reason that they are not recognised as employees. Calls for the abolition of the ‘contractor for labour system’ by trade unions and civil society have gone unheeded by the government.
Malaysia recognises that households earning less than RM4,000 a month requires financial assistance, and local workers do get a small assistance from the government through the BR1M program – but migrant workers are excluded from this benefit.
Weakening ringgit causes migrants to earn 20-40% less
With the financial problems Malaysia is facing, coupled with the increased cost of living – new taxes, increased transport costs, and the weakening of the ringgit in relation to the currency of the countries of origin of migrants – it is the migrant worker who suffers the most.
The weakening ringgit also means that the money migrant workers send back home to their families is now much less, and this has a serious impact on their families/dependents and the ability to settle their debts back home.
It was recently reported that “for instance, employees from Bangladesh used to make 44 taka for every RM1, but now it is about 17 taka. The drop is very drastic, more than 40%. Even the ringgit to the Indonesian rupiah has seen a drop in value by 20%” (The Malaysian Insider, 5 February 2016).
Unjust to impose new financial obligations on migrant workers already In Malaysia
It is totally unjust for Malaysia to impose new financial obligations by law on migrant workers, which did not exist when they agreed with their employers to come and work in Malaysia for three to five years. Any new obligations, especially of payment by migrant workers, should only apply to new migrant workers who have yet to agree to come to Malaysia to work – certainly not to those who are already here and working.
The Malaysian Trades Union Congress (MTUC) and employer groups have been informed that employers will now have to pay migrant workers levies. This was also mentioned in a media report, which stated, “The FMM [Federation of Malaysian Manufacturers] said the government recently informed employers that the levy burden would be shifted back to them” (The Star, 2 February 2016).
However, employer groups have started a campaign, lobbying the Malaysian government to reconsider, and the Malaysian government has been reported as saying that they may reconsider. There is concern that this re-consideration may not just be about the amount of the levy payable, but also the question as to who will have to pay the levy – migrant workers or their employers?
Therefore, we the undersigned:
- call on the Malaysian government in the name of justice, to ensure that it must be the employers of migrant workers that should be paying this migrant workers levy – not the migrant workers.
- call on the Malaysian government to also reconsider the increase of the levy rate, at this time whilst Malaysia, and especially small Malaysian businesses, is affected by the economic crisis and the effect of the falling ringgit.
- Call on the Malaysian government to increase the minimum wage of all workers in Malaysia to RM1,200–1,500, to compensate for the increased cost of living in Malaysia, and the falling value of the ringgit with reference to the currency of the migrant workers’ countries of origin.
- Call on the Malaysian government to abolish the ‘contractor for labour’ system and ensure that all workers who are working in a workplace are all recognised employees of the said workplace and are treated equally as workers.
Mohd Roszeli bin Majid
For and on behalf of the 89 organisations, trade unions and groups listed below:
2) Alternative Asean Network on Burma (Altsean-Burma)
3) Asia Monitor Resource Centre (AMRC)
4) Asia Floor Wage Alliance
5) Asia Pacific Forum on Women Law and Development (APWLD)
6) Association of Human Rights Defenders and Promoters- Myanmar
7) Asociación de trabajadoras del Hogar a Domicilio y de Maquila, Atrahdom, Guatemala, Centro Amercia.
8) Bangladesh Groep Nederland (Bangladesh Group The Netherlands)
9) Bangladesh Institute of Labour Studies – BILS
10) Blast, Bangladesh
11) Boat People SOS (BPSOS)
12) Building and Wood Workers International (BWI) Asia Pacific Region
13) Campagna Abiti Puliti – Italy
14) Caram Asia
15) Clean Clothes Campaign International Office (CCC)
16) Club Employees Union Peninsular Malaysia(CEUPM)
17) Coalition to Abolish Modern-day Slavery in Asia (Camsa)
18) Crispin B. Beltran Resource Center (CBBRC),Philippines
19) CWI Malaysia (Committee for Workers International)
20) Defend Job Philippines
21) Fair – Italy
22) Fair Action, Sweden
23) Foundation For Women, Thailand
24) Garment and Allied Workers Union, India
25) German Clean Clothes Campaign
26) Homeworkers Worldwide, United Kingdom
27) Institute for Development of Alternative Living (Ideal)
28) IndustriALL Bangladesh Council (IBC)
29) Institut Rakyat
30) International Labor Rights Forum
31) Jaringan Rakyat Tertindas (Jerit)
32) Jatio Shromik Federation (JSF), Bangladesh
33) Karmojibi Nari (KN), Bangladesh
34) Kesatuan Pekerja-Pekerja Perodua
35) Kesatuan Sekerja Industri Elektronik Wilayah Selatan, Semenanjung Malaysia (KSIEWSSM)
36) Knowledge and Rights with Young people through Safer Spaces (Kryss)
37) Labour Behind the Label
38) Labour Studies and Action Centre (Cereal), Mexico
39) Legal support for Children and Women (LSCW), Cambodia
40) Malaysians Against Death Penalty and Torture (Madpet)
41) Malaysian Election Observers Network
42) Malaysian Trades Union Congress (MTUC)
43) MAP Foundation (Thailand)
44) MHS Aviation Employees Union
45) Migrante International
46) Mission for Migrant Workers
47) Myanmar Migrants Rights Centre
48) Network of Action for Migrants in Malaysia (Namm)
49) National Garment Workers Federation (NGWF), Bangladesh
50) National Union Employees in Companies Manufacturing Rubber Products (NUECMRP)
51) National Union of Transport Equipment & Allied Industries Workers (NUTEAW), Malaysia
52) NLD LA Malaysia
53) North South Initiative
54) Oriental Hearts and Mind Study Institute (OHMSI)
55) Panggau Sarawak
56) Paper Products Manufacturing Employees’ Union of Malaysia (PPMEU)
57) Parti Rakyat Malaysia (PRM)
58) Parti Sosialis Malaysia (PSM)
59) Pax Romana ICMICA
60) Peoples Service Organisation (PSO)
61) Persatuan Sahabat Wanita Selangor (PSWS)
62) Pertubuhan Angkatan Bahaman, Temerloh, Pahang, Malaysia
63) Persatuan Promosi Hak Asasi Manusia (Proham)
64) Radanar Ayar Rural Development Association, Myanmar
65) Repórter Brasil
66) Safety and Rights Society, Bangladesh
67) Sahabat Rakyat
68) Schone Kleren Campagne (CCC Netherlands)
69) SEA Women’s Caucus on Asean
70) Solidarity of Cavite Workers (SCW), Philippines
71) Sramik Nirapotta Forum, Bangladesh
73) Tenaga National Berhad Junior Officers Union (TNBJOU)
74) Tenaganita Women’s Force, Malaysia
75) Textile Clothing and Footwear Union of Australia
76) The Collectif Ethique sur létiquette, Clean Clothes Campaign French
77) Think Centre, Singapore
78) UNI Global Union
79) War on Want
80) WARBE Development Foundation, Bangladesh
81) Workers Hub For Change (WH4C)
82) Women Peace Network-Arakan, Myanmar
83) Women Rehabilitation Center (Worec), Nepal
84) Workers Assistance Center, Inc (WAC) , Philippines
85) Vietnamese Women for Human Rights
86) Yaung Chi Oo Workers Association (YCOWA)
87) Yayasan Lintas Nusa, Indonesia
88) IMA Research Foundation, Bangladesh
89) International Trade Union Confederation (ITUC)
90) Women’s Aid Organisation (WAO), Malaysia
91) Pinay (The Filipino Women’s Organisation in Quebec), Canada
92) Cividep India
93) Kesatuan Sekerja Industri Elektronik Wilayah Utara Semenanjung Malaysia
94) Centro Nuovo Modello di Sviluppo, Italy
95) National Union of Flight Attendants Malaysia (Nufam)
96) Pusat Komas
97) Perak Women for Women Society (PWW)
98) Asian Migrants Centre
99) Centre for Alliance of Labour and Human Rights (Central), Cambodia
100) Labour Education and Service Network
101) Mekong Migration Network (MMN)
102) Kilusang Mayo Uno (KMU), Philippines
103) Maruah, Singapore
104) Centre for Migrant Advocacy (CMA) Philippines