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FOCUS March 2013 Volume Vol. 71

Cheap, Vulnerable and Easily Exploitable: Migrant Workers In Malaysia

Charles Hector

Malaysia, a multi-ethnic, multi-religious country of about twenty-nine million,1 has about two million documented migrant workers, and at least two million undocumented migrant workers.2 The Malaysian labor force is forecasted for 2013 at 13.3 million, with unemployment rate at 3.1 percent.3
Malaysia officially started to allow migrant workers into the country in the 1990s allegedly to overcome the labor shortage faced by Malaysian employers, particularly in the plantation and construction sectors. In 2000, this was expanded to the manufacturing and service sectors. Migrant workers, especially from neighboring Indonesia, Philippines and Thailand, have always been in Malaysia long before the official policy was adopted.
In 2010, it was reported that there was about 1.8 million foreign workers spread across sectors such as manufacturing (688,886), construction (288,722), plantation (256,382), domestic workers (224,544), services (180,890), with the rest being in agriculture.4 Majority of these workers come from the following countries ranked according to number of workers: Indonesia (917,932), Bangladesh (307,366), Nepal (175,810), Myanmar (140,260), India (113,797), and Vietnam (74,842).5
Services sector consists of eleven sub-sectors: restaurants, cleaning services, cargo handling, launderette, golf clubs (caddy), barbershops, wholesale/retail businesses, textile shops, metal/scraps/ recycling, welfare homes, and hotels/resorts.
Nationals from Indonesia, Cambodia, Nepal, Burma [Myanmar], Laos, Vietnam, Philippines (male only), Pakistan, Sri Lanka, Thailand, Turkmenistan, Uzbekistan, and Kazakhstan are generally allowed to work in all permitted sectors. Workers from India are permitted only to work in the services sector (as cooks, wholesale/retail workers, barbers, metal/scraps/ recycling workers, textile sellers), in the construction sector (fixing of high voltage cable only), and agriculture and plantation sectors. There seem to be no justification for the discrimination against workers from India, and women from  the Philippines.6
Employers of migrant workers are required to pay an annual levy for each worker whereby the rates depend on the sector employed in – manufacturing (RM 1,250 [409 US dollars]), construction (RM 1,250 [409 US dollars]), plantation (RM 590 [193 US dollars), agriculture (RM 410 [134 US dollars]), domestic help (RM 410 [134 US dollars]), services - welfare homes (RM 600 [197 US dollars]), services - island resorts (RM 1,200 [393 US dollars]), services - others (RM1,850 [606 US dollars]).7
Article 8 of the Federal Constitution of Malaysia provides that "All persons are equal before the law and is entitled to equal protection of the law." By using the term "person," as opposed to “citizen,” the constitutional provision makes it most clear that this guarantee of rights extends to all persons, including migrant workers.
Malaysia has no quota system to restrict the number of migrant workers employed, and many employers prefer to employ the more vulnerable and exploitable migrant workers. Migrant workers are vulnerable to exploitation due to several reasons:
First, migrant workers are bound to a single employer, which means they cannot opt to change employers. Thus, even in cases of exploitation and rights violation, they have no choice but to work for the said employer or return back to their country of origin. Considering the debt already incurred when they came to Malaysia, they virtually have no other choice but to remain working despite bad conditions.
Second, employers also can very easily compel migrant workers to work long hours, sometimes even twelve hours for seven days a week. The 1998 amendment to the Employment Act authorizes the Director General of Human Resources to allow employers to require their workers to work for more than eight hours per day or more than forty-eight hours a week even on rest days and public holidays. The hard-fought right to eight-hour work per day does not exist anymore in Malaysia. The right of workers to refuse overtime work has also disappeared.
Third, violating migrant workers’ rights and getting away with it is easy.  Access to justice, even though available in law, is practically not a right enjoyed by migrant workers. It matters not that there is a pending labor claim, or even a criminal case against employers, Malaysian Immigration Department continues to terminate and/or end the right of migrant workers to stay and/or work legally in Malaysia at the behest of employers, without giving the migrant workers the right to be heard. Premature deportation of migrant workers back to the countries of origin, despite their protest and the intervention of the Malaysian National Human Rights Commission, happens.
Fourth, using migrant workers maybe now cheaper since Malaysia has removed the burden of levy from the employers and the requirement for them to pay minimum wages to migrant workers.
Lastly, migrant workers in Malaysia are not only important as workers – but have become a source of income not just to the government and the contractors for labor but also to many financial institutions that provide banking and remittances services, insurance companies, and medical institutions that provide the annual medical check-up for migrant workers. As cheap vulnerable labor, they help Malaysia stay competitive in attracting foreign investors and multinational companies (MNCs) to open up factories and businesses in Malaysia.

Asserting Rights

When a migrant worker claims rights, many employers resort to terminating the employment contract that leads to the cancellation of the work permit/visa/pass, and thus also ends their right to remain and/or work legally in Malaysia. The visa/pass is cancelled in disregard of the complaint filed or the pending proceeding at these avenues of justice. With the complainants forced to leave Malaysia, the search for justice effectively ends.8
This reality makes documented migrant workers vulnerable and easily exploitable, and many employers take advantage of this fact. As a result, employers can get away free from any responsibility including payment of wages and other monies due and payable to the migrant workers.

Undocumented Much More Vulnerable

The estimated two to five million undocumented migrant workers in Malaysia are certainly in much worse situation. Labor and contractual rights should rightfully not be linked with immigration status but alas in Malaysia, it seems to be. When undocumented migrant workers claim their unpaid wages, their employment is considered illegal and employers who have reaped the benefits of their labor escape liability.
Further, being undocumented places migrant workers at risk of being arrested, detained, charged and convicted in court, sentenced to prison and whipping, and also deportation. Undocumented migrant workers are thus even more vulnerable and subjected to greater injustice.

Minimum Wages for All Workers

Government mandated minimum wage did not exist in Malaysia till mid-2012. A 2009 government survey of about 1.3 million workers revealed that about 34 percent of Malaysian workers earned RM 700 (225 US dollars) or less, lower than Malaysia’s poverty line income of RM 800 (260 US dollars).9  This seemed to have led the Malaysian government move to fix a minimum wage that all workers should be entitled to.
Almost four years passed before the Minimum Wage Order 2012 was gazetted in July 2012. Under this Order, workers in Peninsular Malaysia can enjoy a minimum wage of RM 900 (290 US dollars), while workers in Sabah and Sarawak would have RM 800 minimum wage. Employers with more than five workers employed have to give minimum wages beginning January 2013, while other employers would give minimum wages by July 2013.
On 28 December 2012, the Minimum Wage (Amendment) Order 2012 was issued exempting over six hundred employers from paying minimum wages until April, July or October 2013. These employers are required to comply with the obligations to pay workers minimum wages only after these new dates.
In January 2013, many workers who began receiving minimum wages found that their monthly remuneration was adjusted without their approval. Allowances and other benefits that they previously enjoyed were removed or reduced, resulting in many workers receiving even less than what they had been earning. Some found that their normal working hours per week were increased, hence affecting their overtime income. Some workers, especially those that did not have a union, were also ‘forced’ to sign documents agreeing to the re-structuring of their monthly remuneration, the alternative being termination.10
The minimum wage law is supposed to make basic wages equal at least to RM 900, without affecting overtime and other allowances/benefits they were entitled to. Many workers protested the restructuring of monthly remuneration, but did not get much attention from the government.11
It is a grave injustice for employers to subject with impunity the migrant workers already working in Malaysia, based on promised several years of employment, to sudden change in the terms and conditions of their employment. Despite protests, the government has not taken action to remedy the situation.  It may be more just if the new terms and conditions of employment were applied only to incoming first-time migrant workers, who would have to be properly informed of the new liabilities and/or changes in the rights of workers.

Exceptions to the Minimum Wage Rule

The Malaysian government repeatedly gave the assurance that the right to minimum wage would be enjoyed by all workers, including migrant workers. But of late, things changed to the detriment of migrant workers.
The National Wage Consultative Council of Malaysia issued on 19 March 2013 a press statement12 regarding a government decision on the Implementation of Minimum Wages. The decision states that “local employees (citizens) shall be paid minimum wages as per the [2012] Order.” But for migrant workers, the following apply:

a. Deferment of payment of minimum wages by small and medium enterprises (SMEs) for migrant workers. The SMEs are “given blanket deferment of the implementation of the minimum wages for their foreign workers until 31 December 2013.” Even those enterprises that do not fall under the SME category can apply for deferment of payment of minimum wages of migrant workers if they face “difficulties” in doing so.
b. Burden of paying levy – employers are given “a blanket approval for deductions of levy and cost of accommodation” from the migrant workers. The general limit of the amount of levy that can be taken from the migrant workers is RM 50 (16 US dollars) per month. But this amount can still be raised upon application with the Labor Department due to cost of accommodation.

Within the SME category, the medium enterprises are businesses having a sales turnover between RM 10 million (a little over 3 million US dollars) and RM 25 million (8 million US dollars) or with more than fifty to one hundred fifty full-time employees. These businesses are big enough to afford paying all workers their minimum wages including migrant workers.
Migrant workers13 have been protesting the non-receipt of minimum wages according to law, and now indications are that Malaysia may indeed go against its previously declared position that all workers in Malaysia, including migrant workers, will be entitled to minimum wages.
The Malaysian Cabinet had already decided on 30 January 2013 that a levy that was previously paid by employers would be recovered from migrant workers. Labor Director-General Datuk Ismail Abdul Rahim was reported to have said in 2009 that “[T]he rationale behind getting employers to bear the levy was to discourage them from employing foreigners...”14 The recent Cabinet decision does not support this rationale anymore, instead helps the employers of migrant workers.
The Malaysian Trade Union Congress and many groups15  protested the new decision, which affects the policy of equally entitling all workers (local and migrant) to minimum wage. The migrant workers, with additional levy deduction, would receive less than minimum wage.
Khalid Atan, the President of the Malaysian Trade Union Congress (MTUC) said, “...if workers were asked to pay the levy, the minimum wages policy would not benefit them at all, as whatever little increase in salary they enjoyed, would be wiped out with the levy payment.”16  With the recent government decision not having been gazetted, would it have legal effect?

Loss of Right to Join Trade Unions

Despite the immigration condition that migrant workers do not enjoy freedom of association, Malaysian trade unions maintain that they have the right to join trade unions. As a result, many migrant workers are members of trade unions, and enjoy the benefits of collective bargaining agreements whenever they exist.
But the situation changes when the owners/operators of factories, plantations and workplaces resort to using migrant workers supplied by third parties. Since they are technically not the employers, trade unions cannot deal directly with them. As a consequence, migrant workers cannot enjoy the benefits that collective bargaining agreements provide.
This “outsourcing scheme” in bringing in migrant workers is allowed under the 2012 amendment of the 1955 Employment Act that recognized a new entity now called the ‘contractor for labor’.
Essentially, the contractor for labor is a human resource supplier for factories and industries that need workers. These workers do not become employees of the owners/operators of the workplaces despite the fact that these owners/operators control and supervise the workplaces. As a result, employers (local or foreign) can now avoid employment relationships and hence escape all obligations of an employer. The practice started with migrant workers, but it has now been extended to local workers.
Workers under this scheme are at a disadvantaged position because

a. they get lower pay from the contractors of labor, who are paid based on hours worked
b. they cannot put pressure on the owners of the workplace when their rights are violated. When they get abused at the workplace, they cannot go on strike and force the shutdown of workplace operations.

Becoming a licensed contractor for labor is akin to striking gold. With hundreds of workers under its management, it can earn so much each day.
Many contractors for labor do not have much real assets that provide them an excuse from paying liabilities to workers who succeeded in their claims for payment. The contractors for labor can easily seek a declaration of bankruptcy or wind-up the company. Once closed, they can open another company the next day.
Given the restrictions as to union formation as mentioned earlier, compounded by the fact that in Malaysia trade unions are sector/industry based, it is difficult for employees of contractors for labor to even join national or regional trade unions since most contractors for labor supply workers to so many different sectors/ industries.
Trade unions and civil society have protested this move,17 calling for the abolition of the “contractor for labor” system, and for the absorption of all workers supplied by these third parties as employees of the owner/operator of workplaces and businesses.

Will the UN “Protect, Respect and Remedy” Framework Improve the Plight of Migrant Workers?

Malaysia has not ratified or signed the United Nations (UN) Convention on the Protection of the Rights of All Migrant Workers and Members of Their Families, and most other UN and International Labour Organization (ILO) conventions. Even for Conventions that it has signed or ratified, criticism and recommendations by the international community fall on deaf ears – more so since many of these international obligations concerning human rights and workers rights do not have effective teeth to ensure compliance, unlike trade agreements.
Migrant workers, and workers in general, will continue to suffer injustice and rights violations unless people and governments of the world change their priorities from promoting solely the interest of businesses, and refocus the attention to justice and human rights, including the rights of migrant workers. In June 2011, the United Nations Human Rights Council adopted the report of the UN Special Rapporteur on Business and Human Rights (John Ruggie) entitled “Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework.” But one wonders to what extent will it impact on protecting the rights of workers, especially migrant workers, in Malaysia.
For the rights of workers, especially those of migrant workers, to be protected, there must be serious efforts undertaken not just by governments and businesses, but also the general public who must realize that they have the power to make a change as consumers, owners of businesses, and electors of governments. Workers and unions must also transcend personal self-serving agendas confined to workplaces, their unions and national/regional boundaries and struggle to promote human rights and workers rights for all.

Charles Hector is a human rights defender and lawyer. In February 2011, he was sued for RM 10 million (3.2 million US dollars) by a Japanese company for highlighting the plight of migrant workers, which the company claimed were not their employees but workers supplied by a third party. The case was amicably settled, and has been documented in a book entitled “Electrifying matters...for human rights defenders and migrant workers in the electronic industry” jointly published by ALIRAN and GoodElectronics.

For further information, please visit the author’s blog: http:// charleshector.blogspot.jp/.

Endnotes

1. See “Facts and Figures”, Malaysian Investment Development Authority, www.mida.gov.my/env3/index.php?page=key-economic-indicators.
2. Liz Gooch, “Malaysia Considers Amnesty for Illegal Immigrants,” The New York Times, www.nytimes.com/2011/06/08/business/global/08iht-amnesty08.html?_r=0.
3. Malaysian Investment Development Authority, www.mida.gov.my/en_v2/index.php?page=key- economic-indicators.
4. See Tuan Haji Md Sabri Bin Haji Karmani, “Migration of Labour in Malaysia,” presented during the ASETUC National Advocacy Workshop, "ASETUC for ASEAN Community: From Vision to Action," 8-9 June 2010, Federal Hotel, Kuala Lumpur. Mr. Karmani was Deputy Director General, Labour Department, Penisular Malaysia in 2010. The powerpoint presentation of Mr. Karmani is available at www2.asetuc.org/pages/activities/activities-in-2010/asetuc-malaysia-national-advocacy-seminar-8-9-june-2010.php.
5. Ibid.
6. Malaysian Investment Development Authority, as on 10 April 2013, www.mida.gov.my/en_v2/index.php?page=employment-of-foreign-workers.
7. Ibid.
8. See for example the “Asahi Kosei (M) Sdn. Bhd must Respect Human Rights and Worker Rights, Reinstate Thiha Soe and Aung San Without Loss of Benefits” – Joint Statement by sixty-nine groups on 14 February 2011, at www.prachatai.com/english/node/2308.
9. APNews, “Malaysia sets 1st minimum wage for private sector,” Townhall.com, 1 May 2012, http://townhall.com/news/business/2012/05/01/malaysia_sets_1st_minimum_wage_for_private_sector.
10. “Migrant Workers Speak Up for the Right to Minimum Wage in Malaysia,” IFWEA, 3 March 2013, www.ifwea.org/?x103997=429973; Priscilla Prasena, “Revoke levy decision, govt told,” FMT News, 5 February 2013, www.freemalaysiatoday.com/category/nation/2013/02/05/revoke-levy-decision-govt-told/.
11. According to China Press, about five hundred foreign workers of a furniture factory in Muar staged a strike against their employer for refusing to implement the minimum wage policy. Malaysiakini, www.freemalaysiakini2.com/?p=66276; Hafiz Yatim, “1,000 Proton staff protest over pay increase,” Malaysiakini, www.malaysiakini.com/news/221080.
12. See www.mohr.gov.my/.../KENYATAAN_AKHBAR_GAJI_MINIMUM_19313_bi.pdf.
13. Strike by foreign workers turns violent; Malaysiakini, www.malaysiakini.com/news/223427; Foreign workers briefly detained for planning
protest in Malaysia, 17 March 2013, http://news.xinhuanet.com/english/world/2013- 03/ 17/c_132241096.htm.
14. Bernama, “Employers can deduct levy from wages, again,” Star, 16 April 2009, http://thestar.com.my/news/story.asp?file=/2009/4/16/nation/20090416161055&sec=nation.
15. Prasena, op cit. Also, “Malaysia: Minimum wage for all ,” IndustriAll , www.industriall-union.org/malaysia-minimum-wages-for-all.
16. “MTUC: Don't give in to employers' demand on foreign workers levy,” Star, 10 January 2013, http://thestar.com.my/news/story.asp?file=/2013/1/10/nation/20130110182633&sec=nation.
17. See for example “Abolish the ‘Contractor for Labour’ system - Withdraw the 2012 amendments to Employment Act,” Clean Clothes Campaign, www.cleanclothes.org/abolish-the-contractor-for-labour-system.


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