Sunnier days for workers?
Writer: Lee Hwok Aun
Published: Fri, 04 Jan 2013
THE year 2013 could be a positive turning point for work in Malaysia.
I say could be, not will be, not only because we cannot foretell the future, but also because we’ve seen also some specific hints of stagnation, if not regress, on the labour front.
2012 ended badly for work in this stubbornly upper middle income country of ours.
I wonder whether we will progress in elevating worker protection, wages, and decent work conditions to respectable standards.
But since this is bubbly week one of a fresh new year, let’s start with some optimism that we can take some small steps.
In early December, 105 foreign women – 95 Indonesians, six Filipinos and four Cambodians – were found locked up in an employment agency’s shoplots in Klang.
The Selangor immigration department reported that they were physically abused, rationed food and denied wages for up to six months.
This latest episode in Malaysia’s long foreign worker abuse saga reignited tensions with Indonesia, and should rekindle this source of national shame and spur decisive action. Unfortunately, the political response has been meek and mild. While suspects have been arrested and face prosecution, the government shows scant resolve to prevent recurrences.
The situation demands an authoritative report to clarify and verify allegations of abuse and possible human trafficking.
The National Association of Employment Agencies (PIKAP) assembled its own investigative taskforce and disputed claims of physical abuse and food deprivation of the women.
In its haste to mitigate damage, though, PIKAP seemed to suggest that corralling workers in office premises is not a form of physical abuse.
Let’s be clear: keeping workers captive abuses their bodies. It is a breach of basic human rights and dignity, regardless of whether they were famished or scarred.
We are all affected in some way.
Mistreatment of foreign workers is symptomatic of deep malaises in our economy: decades long growth in labour contracting, perpetuation of low skill, insecure work, and supremacy of profits over wages.
The system undermines our ability to shift to higher skill and higher productivity, to foster work conditions that are conducive for technological advancement.
Who wants to invest in workers that are here today and gone tomorrow? Which employer wants to train people working for the labour contractor?
Contract labour is mobile, transient, insecure, vulnerable, and exploitable. This mobility runs sideways, as workers move from low-skill job to low-skill job, not upward.
Labour contractors exert power over these workers, especially when they are foreign, but this forms a bedrock of the labour market that directly or indirectly touches everyone.
One of the arguments for a system of contract labour and insecure work is that it spurs productivity: security breeds laziness.
Actually, it is more prolific at breeding worker exploitation; there is nothing to laud about this condition.
Our nation does deserve some credit for instituting minimum wage from Jan 1, the date it takes effect on companies hiring more than five employees.
Still, I welcome it with caution, for we have not put in place enforcement mechanisms in proportion to the legislation’s sweeping scope, and curtailed its impact by making concessions and modifications.
The government has not publicly committed to expanding inspection personnel or establishing channels for reporting non-compliant employers.
The National Wages Consultative Council Act (2011) governing minimum wage unambiguously defined minimum wage as basic wage.
However, the Minimum Wages Order gazetted in July 2012 permits employers to add allowances and variable pay components onto basic wage.
They must negotiate such wage restructuring with employees or unions, but what constitutes negotiation is not clarified.
So we are getting into a muddle, and potentially undermining two important intentions of designating minimum wage as basic wage.
First, it raises the cost of overtime, which is referenced to basic wage, and thus averts employees being overworked and applies pressure for productivity gains.
Second, it bolsters workers’ EPF savings. Including allowances as wages paid in compliance with the legal minimum sets a precedent that may be difficult to amend, and complicates future minimum wage revisions.
How might we progress better this year?
We must fundamentally rethink our current mode of operations that prizes labour contracting and work insecurity.
We need effective enforcement of minimum wage, and clarity on how minimum wage in future can be strictly defined as basic wage.
It looks like we could also do with a national pow wow on inequality and the distribution of national income between wages and profits, and how increasing the share of wages might bring socio-economic benefits.
The United Nations Conference on Trade and Development (UNCTAD) has drawn attention to this. Its flagship Trade and Development Report for 2012 analyzed how the rise of profit share in national income corresponds with high inequality and diversion of resources from productivity-enhancing industry to profiteering, speculative activities, often to the detriment of human resources and long term economic growth.
Happy working this out in 2013!