LABOUR-MALAYSIA: Hit Foreign Workers First Govt Tells Employers

  • by Anil Netto (penang)
  • Sunday, March 22, 2009
  • Inter Press Service

Worries about retrenchment and unemployment have been mounting as Malaysia sinks into a recession, its export-oriented economy taking a hit from a slump in global consumer demand.

In the last quarter of 2008, the economy grew by just 0.1 per cent and many fear the economy will shrink this year despite a huge 60 billion ringgit (16 billion US dollars) government stimulus package.

In January, exports dropped by 28 percent and the number of workers employed by the manufacturing sector fell by nine per cent against the previous year.

Thousands have been retrenched in the last few months. Labour Department statistics for the month of January alone show 4,325 workers retrenched of which 2,153 were local and 2,172 foreign. These of course are only reported figures.

The steady rate of retrenchments has worried the government, which has announced a principle of foreign workers first out (FWFO), meaning that employers should lay off foreign workers before they retrench locals.

Even the country's trade union movement is worried about the influx of migrant workers at a time when retrenchments are rising.

The issue came under the spotlight when the Bangladeshi labour counsellor said that 70,000 workers from that South Asian country with approved visas would be arriving soon to take up jobs in the plantation, construction and services sectors.

A senior official of the Malaysian Trades Union Congress pointed out that thousands of Bangladeshi workers were experiencing employment uncertainty. He said it would be better to revoke their visas while they were still in their country, instead of landing here and becoming unemployed or under-employed.

But activists point out that many of the foreign workers in Malaysia have paid small fortunes to agents in their home countries to work in Malaysia. Most of the foreign workers in the country are from Indonesia, Bangladesh, India, Myanmar, Vietnam, Nepal and the Philippines.

They are lured here by foreign recruitment agents or representative of the more than 250 registered outsourcing countries operating in Malaysia.

If visas are cancelled, foreign workers are unlikely to obtain refunds from the agents. Bangladeshi and Indian workers, for instance, have to raise or borrow around 8,000 to 10,000 ringgit (2192 – 2740 dollars) to pay for agents fees and other charges.

Employment agreements are usually for a period of three years while work permits have to be renewed annually.

But the government has reportedly slashed its work permit approvals by over 70 percent this year. It has also approved a proposal to double the foreign workers' levy imposed on employers to discourage the hiring of foreign workers.

Activists worry that employers could pass down these higher charges for their foreign workers to absorb. In the case of restaurant owners, this could reportedly amount to 3,600 ringgit (988 dollars) per worker. Employers could also be tempted to hire undocumented workers due to the higher levies.

Foreign workers usually have to work one or two years before they can recover what they incurred - or repay the loans they took - in their home countries. If they are sent back earlier, they could well find themselves in debt upon their return home.

Indonesia has expressed fears that some 100,000 of the two million Indonesian workers in Malaysia could be retrenched as companies here shed workers.

'This has not yet happened, so don’t exaggerate it,' outgoing Malaysian Prime Minister Abdullah Badawi was quoted as saying in the Indonesian media during a two-day visit to Indonesia this week. 'And if it ever happens, it will not only happen to migrant workers but also to Malaysians.'

In a joint statement, fifty civil society groups from South and South-east Asia endorsed a statement, pointing out it would be a great injustice if Malaysian employers were allowed to prematurely terminate their foreign workers' employment agreements and send them back home.

Early termination of their employment agreements means they would usually end up in a worse condition than when they first entered into the agreement.

''This is a great injustice, and it is inhumane,'' said the statement. ''If there is going to be early termination of employment agreements which are for a minimum fixed period of employment, then the worker must be paid adequate compensation, at the very least basic wages for the remaining duration of their employment agreement.''

Paying migrant workers the usual termination benefits that Malaysian workers are entitled to - calculated based on the number of years in service - would not be fair either in view of the huge costs the foreign workers incurred in arriving in Malaysia.

Before they send back anybody, the employers should pay what they owe the workers, says Ruth Paul, the coordinator of the Foreign Workers Service Centre on mainland Penang.

''These workers don't have (statutory) retrenchment benefits; so if, say, they have a year remaining on their contract, the employers could pay their outstanding wages (for the remaining period) plus the cost of flight tickets,'' Paul said.

She mentioned a couple of cases in the city of Ipoh recently, where migrant workers were sent back home without their wages because the company was shutting down.

Paul also fears that some employers might just shut down their factories without adequately compensating their migrant workers, leaving them in a lurch.

In the past, she had encountered cases where the employers, who had held on to their workers' passports, suddenly disappeared and could not be contacted. ''The only thing I tell them is to make a police report and contact their embassy.''

Human rights lawyer and blogger Charles Hector suggests that a new policy could be adopted: if a migrant worker has been retrenched, and if he or she has worked less than three years in Malaysia, a new amended work permit could be given to allow the worker to be employed in another sector that needs workers.

''They may be non-citizens, but they are workers and human beings, and they need to be treated as such,'' he wrote in his blog. ''The government needs to develop just policies and principles.''

© Inter Press Service (2009) — All Rights ReservedOriginal source: Inter Press Service

Where next?

Other options