TRADE UNION TRAINING ON EMPLOYMENT
POLICIES,FOCUSING ON YOUTH, TURIN 1/21ST JULY + TOKYO
22/27 JULY 2006
COUNTRY REPORT
COUNTRY
MALAYSIA
NAME OF PARTICIPANT
A.Prem Kumar
NAME OF NATIONAL CENTRE
MALAYSIAN TRADES UNION
CONGRESS (MTUC)
1.
MALAYSIAN TRADES UNION CONGRESS(MTUC)
INTRODUCTION
Malaysian Trades Union Congress is a federation of trade unions and registered under the Societies Act,
1955. It is the oldest National Centre representing the Malaysian workers. Unions affiliated to MTUC
represent all major industries and sector with approximately 500,000 members.
MTUC has been recognized by the Government as the representative of workers in Malaysia and is
consulted by Government on major changes in labour laws through the National Joint Labour Advisory
Council. MTUC also represent labour at the International Labour Organization Conferences and Meetings.
Trade Union Situation
There are more than 500 unions in Malaysia representing nearly 500,000 members. The total labour force
is 11 million. There is only one national labour centre which is Malaysian Trade Union Congress. The
total number of organized is very low compared to the unorganized. There are a lot of reasons for this low
percentage. Firstly, due to Malaysia's labour legislation places extensive restrictions on basic trade union
rights.
The Trade Unions Act of 1959 and Industrial Relations Act of 1967 and subsequent amendments restrict
the right to organize and allow for wide-ranging interference in trade union affairs. Furthermore, certain
categories of workers labelled "confidential" and "managerial and executive" find it extremely difficult to
obtain union recognition and defence and police officers do not have the right to engage in trade union
activity.
Union’s effort to increase union memberships have also been restricted by Section 9 (1) of the Industrial
Relation Act 1967 which does not allow employees working in managerial, executive, confidential staff
and security capacities to join Unions.
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Every trade union is obliged to register and must record its date of establishment "for the purpose of
prosecuting any trade union which fails to apply for registration". The Director General can refuse to
register a union if he considers that a similar one already exists, and he can take as long as he likes to
process an application for registration.
In some circumstances, he may withdraw the registration of a trade union. Appeals against the Director
General’s decision not to register a union can only go to the Minister of Human Resources, who appointed
the Director General in the first place. When registration has been refused, withdrawn or cancelled, a trade
union is considered an unlawful association. The Director General must give his approval before a trade
union can affiliate internationally.
The electronics sector (which accounts for about 40% of Malaysia’s exports) where 140,000 mainly
women workers employed by electronics companies - mostly from Japan, Chinese Taipei, the US and
various European countries, as well as Malaysia itself - have been denied the right to organize a national
union in the electronics industry since the early 1970s, despite continuous efforts by the MTUC and by the
MTUC-affiliated Electrical Industry Workers’ Union (EIWU).
The problems in the electronics sector are exacerbated by the Industrial Relations Act of 1967, amended in
1980, which restricts the scope of collective bargaining, particularly in the public sector and in designated
"pioneer" enterprises.
The entire electronics industry was designated a pioneer industry when the free trade zone was created in
1972, effectively making it a union-free sector. The pioneer status of the electronics industry lapsed after
10 years but national unions were still not allowed to be registered. The thinking behind this policy was
indicated in a speech by the Prime Minister of Malaysia, Dr. Mahathir Mohamad, on 10 September 1992
when he emphasized that low labour cost was a comparative advantage for any country which wanted to
attract foreign investment, adding, "It was for that reason that the government refused to allow the setting
up of a national union for electronics workers."
In 1988, the government announced a relaxation of its policy and said that workers could join unions of
their choice, but vigorous protests from employers quickly reversed this decision. Instead, it was decided
that workers in the electronics industry could join in-house unions. The Malaysian Trades Union Congress
(MTUC) has not accepted this position and continues to demand an industrial union for electronics
workers, while in the meantime it is assisting electronics workers to organize themselves into enterprise
unions for their immediate protection and interests.
A number of in-house unions have been registered, but even workers attempting to form their own inhouse unions in the sector have usually faced management hostility, including dismissal and threats of
dismissal. Employers refuse to recognize free trade unions and sponsor management-controlled
organizations instead. Several companies are reported to have threatened their employees with closure and
relocation to China, Thailand or Central America if unions were formed.
The French electronics multinational Thomson originally allowed a trade union in its Thomson Audio
Kota Tinggi plant in 1989 but then shut it down in August 1993. Motorola, perhaps the biggest private
sector employer in Malaysia, is reputed to have spread rumours that company spies would be sent to
meetings organized by the MTUC. Workers are reported as being too afraid to accept MTUC
leaflets a block away from the factory gates.
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The ILO Committee on Freedom of Association has criticized these provisions many times over the last
twenty years. In 1987, it criticized "the authorities’ refusal to grant recognition to a union which wished to
represent workers for collective bargaining purposes in two electronics industry companies." In 1990, it
expressed "deep concern at the government’s continued refusal to take the necessary measures to bring
law and practice in Malaysia into conformity with the requirement of the principles of freedom of
association." In 1994, the ILO Conference Committee on the Application of Conventions and
Recommendations expressed the firm hope that "restrictions on the scope of collective bargaining
contained in the law would be repealed in the near future". The government has said that it has formally
approved the deletion of the provisions relating to "pioneer" status from the Industrial Relations Act and
that it is taking measures to repeal the provisions.
At the beginning of 1996, unions were optimistic that the government would allow the formation of a
national union of electronics workers, but again this came to nothing. The government justifies its actions
using the argument that in-house unions are more appropriate for the electronics sector. This goes against
the evidence of an ILO study which found productivity in Malaysia to actually be higher in enterprises in
which unions were organized in industrial unions than in enterprises with house unions or non-unionized
companies.
The government also encourages the formation of in-house unions in the public sector. Public service
workers can only form unions on the basis of ministry, department, occupation or trade. The unions can
join federations, but cannot bargain collectively or strike. A council system limits them to "giving views"
on principles governing wages and other terms and conditions of service. Employees of statutory bodies
are only permitted to join in-house unions, though these can affiliate to the public service federation.
In view of the restrictions on industrial action in furtherance of disputes relating to union recognition,
wrongful dismissal, victimization and discrimination, the MTUC has argued that the government must
strictly enforce legal restrictions on employers.
However, such is not the case and many employers, including multinational companies, continue to deny
union recognition, ignore the tripartite code of conduct to promote industrial harmony, violate the
Industrial Relations Act and refuse to comply with Industrial Court Awards to reinstate wrongfully
dismissed workers.
The MTUC reports that the increase in money wages over the last fifteen years has not been proportionate
to the level of economic growth. Employers have been able to use the government’s frequent warnings
about uncompetitive wage increases as a device to limit union-management collective bargaining for
higher wages. The government has persistently resisted the MTUC’s demands for a legal minimum wage,
stating that instead market forces must determine appropriate wage levels.
The Minister of Human Resources has said that foreign workers are not allowed to join trade unions.
However, there is nothing in the law about this. The law merely says that only Malaysian nationals can
hold union office. Despite this, the authorities refused to allow the Electrical Industry Workers' Union to
extend its collective agreement to cover migrant workers. At the same time, there are examples of
employers using migrant workers in order to avoid recognizing trade unions.
In conclusion, restrictions on freedom of association and the right to collective bargaining in Malaysia
undoubtedly weaken trade union bargaining potential and consequently workers’ purchasing power.
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The government has openly stated that it considers restricting wages and trade unions to have been an
important tool in attracting foreign investment and so increasing employment and growth. This is
particularly clear in the case of the ban on trade unions in the so-called "pioneer enterprises", concerning
above all the electronics sector. It is evident that the lack of respect for core labour standards in the area of
freedom of association has been linked to lower wages in Malaysia’s export sector over the past twenty
years, particularly in the electronics sector.
The unions particularly under MTUC are demanding for minum wage of RM900-00 which has not been
granted yet by the government. MTUC organized a nationwide picket on 25/6/2007 to express its
displeasure.
Globalization which results outsourcing,privatization and so on has created unemployment and also
multinationals emphasize on productivity indicates no longer indicates their job security is at stake. New
clauses and legislations are being pushed to the government and companies convenience. Unions are
facing tremendous pressure in dealing all this high handed tactics.
The unions are organizing a lot of training and seminars to educate members and create awareness to them
to ensure they are strong to withstand the wave of globalization. Unions believe by obtaining the
knowledge, they can ensure their job security and rights intact.
2.
ASSOCIATION OF MAYBANK EXECUTIVES (AME)
Association Of Maybank Executives (AME) was formed in 1989. It is still considered a baby or youth in
that sense. It is a inhouse union representing Maybank employees in Malaysia. Maybank is the largest and
biggest bank in Malaysia.
The government of the union is vested with the Annual General Meeting comprising members and the
members of the Executive Council. The Executive Council is elected every year. It consists of the
President, one Vice-President, Hon.General Secretary, Assistant General Secretary, Treasurer and four
excos.
The Hon.General Secretary is the Chief Executive of the union and shall conduct the business of the union
in accordance. The membership of this union consists of about 2,500 members representing from various
states in the country.
Association of Maybank is affiliated to Malaysian Trades Union Congress (General Secretary is a General
Council member), Union Network International (General Secretary is the Youth President) and Federation
of Banks and Finance Institutions (General Secretary is the Vice President).
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3.
POLITICAL SITUATION OF MALAYSIA
1)
Political Situation
The Federation of Malaya, became independent in 1957. Malaysia was formed in 1963 when the former
British colonies of Singapore and the East Malaysian states of Sabah and Sarawak on the northern coast of
Borneo joined the Federation. The first several years of the country's history were marred by Indonesian
efforts to control Malaysia , Philippine claims to Sabah, and Singapore 's secession from the Federation in
1965.
Malaysia has a democratic system of government that is :i)
ii)
Upper House (Dewan Negara)
Lower House (Dewan Rakyat)
The federal government is headed by the Prime Minister while the state government is headed by a Chief
Minister. The elected government is for of 5 years.
General elections were last held in March 2004, and the ruling National Front Government has a mandate
until 2009, except for the State of Kelantan which is under Opposition rule, all other state governments are
under the rule of the National Front. Prime Minister Mr.Abdullah Ahmad Badawi heads the ruling
National Front Government.
2)
MTUC Relationship with Political Parties
MTUC as multi-racial and multi religious mass organization, is committed to the elimination of
exploitation of man by man and poverty, to preservation of human and trade union rights, democracy and
rule of law and to the establishment of a society and dignity. MTUC has therefore an important role to
play in the politics of the country.
MTUC addresses the larger political dimensions including workers rights, human and fundamental rights,
social issues and the communal based political structure. This political dimension or ‘citizen politics’ shall
be pursued at both levels of the national centre and its affiliates.
MTUC hold dialogues on social-economic and political issues relevant to working people and pursue
them with political parties and other public interest organizations which are sympathetic to labour. On the
electoral process, the MTUC will prepare a manifesto. Political parties that respond positively to the
manifesto will be asked to enter into a social contract with the MTUC. Once the agreement is reached,
MTUC will render unreserved support and assistance including active campaigning to the party
concerned.
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3)
Challenges for MTUC and Unions

Legal restrictions in the formation and registration of trade union

convention 87 not ratified.

Minimum wage not implemented

Collective bargaining negotiations under threat

Employers prefer to employ foreign workers.

Increasing of consumer goods and services due to price increase of fuel and
electricity tariff.
4)

Introducing the GST ( good and service tax) by the year 2007.

Most employer tried to avoid their workers to form or join the Union

Generally trade union membership declining for various reasons.

Young workers are not keen to join union.

Effect og Globalization – outsourcing, privatization, retrenchment, VSS,MSS
Economic and Social situation of Malaysia
Malaysia’s economy faces a challenging time ahead as its resilience and strength stands to be tested by
some downside risks facing the global economy.
“While the global economy is expected to expand, there are still downside risks on the horizon”, that for
survival, Malaysia needs to integrate into the global environment or risk being marginalized.
The year 2005 marks the end of the Eighth Malaysia Plan and that the Government has formulated the
policy directions and strategic thrusts of the Ninth Malaysia Plan (2006-2010) as well as the second phase
of Vision 2020.
Strong domestic demand, sustained commodity prices, a healthy banking system, high international
reserves, manageable external debt and a current account that has remained in surplus were some of the
strong fundamentals the nation possessed.
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(a)
Economic growth and its outlook
The Malaysian economy growing very fast in four years and stronger than market expectations. Growth
was broad based, underpinned by strong exports and domestic demand. Malaysia is rich in natural
resources and primary commodities, and the country's economic grow at a very satisfactory rate, 6 % per
year.
It has reduced unemployment and enjoying full employment rate since mid 1990 though the country has
1.7 % foreign workers . Malaysia is also a multi racial country with 2 main national groups- Bumiputeras
and Non-Bumiputera. Bumiputeras refer to Malays and other indigenous people while Non-Bumiputera
refer to other Malaysians of Chinese, Indian, Caucasian or other ethnic origins.
Further, Malaysia is the place where call centres are being established by foreign investors due to cheap
labour and Malaysian who are fluent in English. Currently, they are third in ranking behind India and
Phillipines. Most of the youths are now employed in call centres. The job is not secured as we can see a lot
of high turnovers due to the instability of the job.
MALAYSIA: KEY ECONOMIC DATA 2002-2007
Year
No.
Item
2002
2003
2004
2005
2006
2007
1.
Population (million)
24.6
25.3
26.0
26.7
27.2
27.6
2.
Real GDP Growth (%)
5.0
5.5
7.2
5.3
5.9
6.0
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GNP Per Capita (US $)
4.
Labour Force
(thousand)***
5. Labour Force Growth (%)
3,349 3,913 4,378 4,763 5,388 5,806
10,064 10,426 10,846 11,291 11,545 11,775
3.4
3.6
4.0
4.0
2.3
2
6. Employment (thousand) 9,709 10,047 10,464 10,893 11,144 11,363
7. Employment Growth (%)
3.5
3.5
4.2
4.0
2.3
2.0
8. Unemployment (Rate%)
3.5
3.6
3.5
3.5
3.5
3.5
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Source : Economic Report
Malaysia-Number of Employed Youths by Sector in (%)
Sector
2005
2006
2007
12.5
12.2
0.4
0.0.4
0.4
Manufacturing
28.7
28.8
29.2
Construction
7.0
6.8.
6.8
0.2
0.2
0.1
2.6
3.4
2.5
20.5
19.7
14.5
51.0
51.4
51.4
Other Services (Community, social 14.8
14.0
10.9
Agricultural, Forestry, livestock & 12.9
fishing
Mining
& Quarrying
Electric,
Gas
& Water
Transport, Storage &
Communication
Wholesale
& Retail
Restaurants
Finance,
Trade,
and Hotels
Insurance, Real Estate
& Business Services
&
personal services)
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(b)
Foreign trade and investment
Malaysia's pursuit of open trade policies and its attractiveness to Foreign Direct Investment (FDI) have led
to impressive growth and continued economic transformation. Investments are encouraged by an array of
tax and non-tax incentives granted, for the most part, on a non-discriminatory basis to domestic and
foreign-owned enterprises.
Malaysia reemphasizes it commitment to deregulation and liberalization, particularly in the financial
sector. Measures were introduced to extend foreign access to real estate purchases and to develop the
capital market. Malaysia has also reaffirmed its commitment to the WTO financial services negotiations,
with plans to liberalize insurance and brokerage industries.
Malaysia is a member of the Association of South East Asian Nations (ASEAN) and of the Asia Pacific
Economic Cooperation (APEC). Under the ASEAN Free Trade Area Agreement (AFTA), Malaysia has
substantially reduced tariffs on imports from its AFTA partners. It is also committed to reducing tariffs on
imports of practically all manufactures, including automotive products.
5.
Labour Market Situation
Malaysians can be expect more job opportunities and low unemployment in 2008, in line with an
improved economic situation domestically and abroad. All Sectors of the economy are expected to
generate additional jobs, bring this year’s total employment growth to 3.2 per cent, or 325,500 new jobs.
Malaysia continues to attract foreign workers, particularly Indonesians, due to geographical closeness and
similarities in culture and language.
The number of registered foreign workers totalled 1.62 million, with the majority from Indonesia (69.4
per cent), followed by Nepal (10.2 per cent), India (6.2 per cent) and Vietnam (4.6 per cent).
6.
Labour Laws And Industrial Relations
The primary aim of the Industrial Relations Act of 1967 was to create a comprehensive statutory
framework for the orderly conduct of Labour Management relations. It deals in detail with right of
workers and employers and their organizations, recognition of trade unions by employers, collective
bargaining, the settlement of labour disputes as well as strikes and lock-outs. The Minister occupies the
central position and has the responsibility to ensure efficient implementation of the Act.
7.
National Labour Advisory Council (NLAC)
The National Labour Advisory Council (NLAC) has been functioning as a mere window dressing in
Malaysia all these years. The Government uses the NLAC as a living excuse to claim that it has abided by
the requirements of ILO Convention 144 (Tripartite Consultation).
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Young Workers
Young workers classified by Malaysian Trade Union Congress are between the age group 15 to 34 in
Malaysia.. Youth population between the age group 15 to 34 in Malaysia is approximately 9.75 million
and they are around 42.5% of the total population.
Youths are also the largest labour force; about 60 to 55% for the past decade and these are the young
workers of the nation. Percentage of young workers between 15-24 years old are lesser (23.3%) compared
to young workers between 25-34 years old (31.6%). At least 54% of young workers are employed.
Employed young women workers made up of 50% of the total employed male young workers. High
proportion of young workers is in the manufacturing sector. Young workers also the largest number
without employment as the statistics shows that about 83.6% were unemployed especially those between
the age group 15-24, forms 65.6%.
Currently, young workers seem to be in a situation where unemployment are higher among them with
social problems and employed in unskilled/semiskilled job with low wages and depressing working
conditions with the higher possibility of retrenchment. The increasing number of unemployed young
workers, especially those who have no working experience and with those limited number of youths
engaged in highly skilled jobs (around 7%) indicates that the government need to do a lot to improve the
situation in order to achieve higher and healthy economic growth.
Laws that deprive young workers of their rights need to be reviewed. Minimum wage law must be
legislated to guarantee a decent and fair wage and safety and health at work place must be given priority.
For the last few years, various Trade Unions and community organisations are raising issue of Minimum
Wage but till to date the government of Malaysia is reluctant to legislate a minimum wage law.
The idea of Minimum Wage was strongly opposed by Malaysian Employers Federation while Trades
Union Congress says Minimum Wage would increase living standard of workers especially thousands of
lowly paid wage earners like plantation workers, bus drivers and production workers. Due to the loopholes
in the law, employers using various tactics to exploit all young workers (15-34) to gain maximum profit in
the name of productivity and quality by forcing the workers to work longer hours. This mostly happens in
the manufacturing sector.
INTERNATIONALLY-RECOGNIZED CORE LABOUR STANDARDS IN MALAYSIA
Malaysia’s labour legislation places extensive restrictions on basic trade union rights. This is in
contradiction to the commitments accepted by Malaysia at the Singapore WTO Ministerial Meeting and it
poses a challenge to the credibility of the WTO as a rules-based multilateral system for free world trade.
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Freedom of Association and the Right to Collective Bargaining
Malaysia has ratified one of the main ILO Conventions on trade union rights, Convention No. 98, but not
the other, Convention No. 87. It has, been subject to strong criticism by the ILO over many years for its
non-respect of Convention No. 98. Restrictions on freedom of association and the right to collective
bargaining in Malaysia undoubtedly exert a downward influence on wages in export industries, most
flagrantly in the electronics sector where a ban on a national union for electronics workers persists.
Violations of trade union rights with the aim of reducing wage growth and attracting investment by
multinational companies have been a clear part of Malaysia’s export strategy.
Discrimination and Equal Remuneration
Malaysia has ratified one of the main ILO Conventions on discrimination, Convention No. 100, but not
the other, Convention No. 111. Discrimination against women and migrant workers clearly has an effect
on the prices of Malaysia’s exports, particularly in the tax free zones and the plantations sector.
The participation of women in the labour force has increased from 37% in 1970 to almost 50% in 1996.
However, women’s participation remains in the less well-remunerated and less important positions, as
shown by the fact that only 1.4% of women hold decision-making posts.
Furthermore, women continue to predominate in low-skilled occupations in Malaysia’s free trade zones.
Working conditions for Malaysia’s well over one million migrant workers, especially the 500,000 or so
illegal migrants, compare badly with those of national workers. In some sectors, there is extensive use of
and discrimination against migrant workers, such as the construction sector and the plantation sector,
where as much as 90% of the labour force are migrant workers. Many complained of exhaustion and lack
of sleep, respiratory illnesses, dust and cancerous dyes in the workplace.
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