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Current Labour situation in Malaysia Malaysia - 2010. “ place of employment ” means any place where work is carried on for an employer by an employee ; “ employee ” means any person or class of persons—

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Presentation Transcript
slide1
Current Labour situation

in Malaysia

Malaysia - 2010

Bruno Periera

slide2
“place of employment” means

any place where work is carried on for an employer by an employee;

  • “employee” means

any person or class of persons—

  • included in any category in the First Schedule to the extent specified therein; or

(b) in respect of whom the Minister makes an order under subsection (3) or section 2A;

EMPLOYMENT ACT 1955

Bruno Periera

employment senario place of employment
EMPLOYMENT SENARIO Place of employment
  • Types ofEMPLOYERS
  • Types of WORKERS
  • Types ofCONTRACTS

Bruno Periera

types of employers
Types of EMPLOYERS
  • “employer” means any person who has entered into a contract of service to employ any other person as an employeeand includes the agent, manager or factor of such first mentioned person, and the word “employ”, with its grammatical variations and cognate expressions, shall be construed accordingly;

EMPLOYMENT ACT 1955

Bruno Periera

slide5
“Principal” means any person who in the course of or for the purposes of his trade or business contracts with a contractorfor the execution by or under the contractor of the whole or any part of any work undertaken by the principal;
  • “Contractor” means any person who contracts with a principal to carry out the whole or any part of any work undertaken by the principal in the course of or for the purposes of the principal’s trade or business;

EMPLOYMENT ACT 1955

Bruno Periera

slide6
“Sub-contractor” means any person who contracts with a contractorfor the execution by or under the sub-contractor of the whole or any part of any work undertaken by the contractor for his principal, and includes any person who contracts with a sub-contractor to carry out the whole or any part of any work undertaken by the subcontractorfor a contractor;
  • “Sub-contractor for labour” means any person who contracts with a contractor or sub-contractorto supply the labour required for the execution of the whole or any part of any work which a contractor or sub-contractor has contracted to carry out for a principal or contractor, as the case may be;

EMPLOYMENT ACT 1955

Bruno Periera

slide7

LOCAL Workers seeking employment

Local

WORKERS

Direct

Application

(orwalk-in)

Job Malaysia

MOHR JTK

Private

Employment

Agency

PRIVATE EMPLOYMENT AGENCY ACT 1981

20% commission of 1st Month’s wage charged on placement. Paid either by employer or the worker.

PLACEMENT

FACTORY

(Principle Employer)

Temporary

(FIX TERM)

contract

PROBATION

followed by

PERMANENT

Contract

Bruno Periera

slide8

Migrant

WORKERS

MIGRANT Workers employment

EMPLOYMENT (RESTRICTION) ACT 1968

Non-citizen shall not be employed unless there has been issued valid

employment permit.

Contract of Service/

Temporary

(FIX TERM)

contract

FACTORY

(Principle Employer)

Bruno Periera

slide9

NOW….LOCAL Workers also follow the same flow!

MIGRANT Workers employment

Migrant

WORKERS

Contract of Service/

Contract for Service

Temporary

(FIX TERM)

contract

No Law to regulate? Outsourcing License No., Recruitment No. KHEDN.

Labour Contractors

(Outsource Company)

Labour Contractors

(Outsource Company)

TODAY

Labour Contractors

(Outsource Company)

FACTORY

(Principle Employer)

TOMORROW

FACTORY

(Principle Employer)

FACTORY

(Principle Employer)

THE DAY AFTER

Bruno Periera

slide10

Workers seeking employment in Malaysia

Workers seeking employment

Migrant

WORKERS

Local

WORKERS

Contract of Service/

Contract for Service

Temporary

(FIX TERM)

contract

“NEW” EMPLOYER

RM $ wages

Direct

application

Job Malaysia

MOHR JTR

Private

Employment

Agency

Placement

CONTRACTOR

(Outsource Company)

FACTORY

(Principle Employer)

RM $ wages

FACTORY

(Principle Employer)

TODAY

FACTORY

(Principle Employer)

TOMORROW

PROBATION

followed by

PERMANENT

Contract

Temporary

(FIX TERM)

contract

FACTORY

(Principle Employer)

THE DAY AFTER

types of workers
Types of WORKERS

Employed directly by Employer or Principal :

  • Permanent workers
  • Local contract workers (Fix-term)
  • Foreign contract workers (Fix-term)

------------------------------------------------------------------------------------------------------------------------------

Supplied by Labour Contractorsbut work for Principal employer PAID BY Labour Contractor:

  • Local contract workers (Fix-term)
  • Foreign contract workers (Fix-term)

Bruno Periera

types of contracts
Types of CONTRACTS

1.Employment Contract is a CONTRACT OF SERVICE

(Kontrak Perkhidmatan)

2.Service Contract is a

CONTRACT FOR SERVICE

(Kontrak untuk Perkhidmatan)

(not an employment contract)

Bruno Periera

contract of service kontrak perkhidmatan
Contract OF Service(Kontrak Perkhidmatan)
  • Any agreement between two parties – an employer and an employee, where by:
  • The employer agrees to employ another as an employee; and the employee
    • agrees to undertake certain duties under the direction and control of the employer.
    • agrees, in return for a specified wage or salary and benefits under a terms & conditions of employment from employer.

Bruno Periera

terms and conditions of employment
Terms and Conditions of Employment
  • The employer cannot change the terms and conditions of employment unless employee agrees to it.
  • Any terms and conditions, in a contract of service, that is less favourable than the relevant provision under the Employment Act (1955) is illegal, null and void.
  • Provision in the Act will take precedence over a particular contractual term that is less favourable.

Bruno Periera

slide15
An apprenticeship contract or agreement is also considered a contract of service
  • Agreement, whether oralor in writing and whether express or implied.

Oral contract in writing? How?

Bruno Periera

employment act in 1955
Employment Act in 1955
  • With the introduction of the EA, the then British Administration effectively abolished the indenture labour, bonded labour and the “kanggani” system in Malaya, as it was known then.
  • The totality of the Employment Act 1955 established two very important principles of law.
  • They are:
    • Security of tenure– ensuring permanence of job and
    • Proprietary right to the job– where termination of worker, shall be with just cause and excuse & by due process.
  • These principles are trite law and are considered sacrosanct.
  • MUST be protected at all cost!

Bruno Periera

slide17

Types ofContract OF Service(Kontrak Perkhidmatan)

  • Permanent Contract (permanent workers)

Direct hire (Company workers)

- local workers

  • Fixed Term Contract -

(temporary orcontract workers)

Direct hire   (Company workers)

- Locals & Foreign workers

Bruno Periera

slide18

contract FOR service(not an employment contract)(Kontrak untuk Perkhidmatan)

  • engaged as an independent contractor

(such as a self-employed person or vendor) .

  • engaged for a fee to carry out an assignment, duty or a project for the company.
  • there is no employer- employee relationship, therefore,

NOT covered by the Employment Act

Bruno Periera

terms conditions of work for contract workers
TERMS & CONDITIONS of work for CONTRACT workers
  • Hours of Work: 1 Shift – 12Hours
  • Wages: basic RM 400 – RM 450
  • Overtime: fixed amount, does not follow rates for normal days, rest days & public holidays OR none.
  • Annual leave, Public holidays pay, Sick leave, Maternity leave - Not mandatory.
  • No payment for legally mandated breaks.
  • Pay cut for absent or late for work or on sick leave or on annual leave.
  • Toilet breaks monitored – 2x for 12 hour shift
  • Accommodation & Transport provided FoC.

Bruno Periera

types of contract for service kontrak untuk perkhidmatan
Types of contract FOR service(Kontrak untuk Perkhidmatan)
  • Fixed Term Contract -

(temporary orcontract workers)

workers hired by Outsourced Company to work in the principle company. 

- Locals & Foreign workers

Bruno Periera

slide21
There is no single conclusive test to distinguish a contract of employment from a contract for services.  Some of the factors to be considered in identifying a contract of employment include: i) Control
  • Who decides on the recruitment and dismissal of employees?
  • Who pays for the employees' wages and in what ways?
  • Who determines the production process, timing and method of production?
  • Who is responsible for the provision of work?
  • ii) Ownership of Factors of Production
  • Who provides the tools and equipment?
  • Who provides the working place and materials?
  • iii) Economic Considerations
  • Does he carry on business on his own account or carry on the business for the employer?
  • Does he involve in any prospect of profit or is he liable to any risk of loss?
  • How are his earnings calculated and profits derived?

Bruno Periera

slide22
Essential Clauses of Contract of Service :
  • Commencement of employment;
  • Appointment – job title and job scope;
  • Hours of work;
  • Probation period, if any;
  • Remuneration;
  • Employee's benefits (e.g. sick leave, annual leave, maternity leave);
  • Termination of contract – notice period; and
  • Code of conduct (e.g. punctuality, no fighting at work).

Bruno Periera

laws on protection of rights of workers
LAWS ON PROTECTION OF RIGHTS OF WORKERS

STATUTE

  • Employment Act 1955
  • Industrial Relations Act 1969
  • Trade Unions Act 1959
  • Workmen’s Compensation Act 1952
  • Occupational Safety and Health Act 1994
  • Social Security Act 1969
  • Immigration Act 1959/63

Contract of Employment

The contract of employment stipulates terms and conditions on duration, wages, work shift, days off, sick leave, medical fees, payment of levy, visa, medical and travel.

Bruno Periera

slide24

Modus operandi

in getting permit for foreign workers.

  • Companies advertise job vacancies in front of their factory gates.
  • Company’s own Human Resource officer – interviews and identify potential candidates.
  • Identified candidates - sent to sign a contract with an outsource company, usually without receiving a copy.
  • Is the contract a contract for service or

contract of service?

Bruno Periera

slide25

The “successful” candidate –

  • Handed over to company Human
  • Resource officer.
  • Provided with the company badge with a unique Number to denote “contract workers”.
  • One week orientation and work
  • process training.
  • Successful candidates sent to the Assembly line supervisor to start work ascontract labour.
  • Workers not aware of the type of contract!

Bruno Periera

slide26
Not wanting to be exploited..

Locals QUIT…in PROTEST!

(albeit SILENTLY !)

Applying for PERMIT

  • Due to the high attrition of contract labour.

company applies to the government agencies (MOHR & KDN) for permit to bring in foreign workers.

The reasons often cited

    • local workers are not keen on menial jobs,
    • that they are pampered and like to “lepak”.
  • TREATEN to relocate operation to third country

Bruno Periera

slide27

Sikap Pekerja Tempatan

  • Tidak berminat berkerja lebih masa dan syif
  • Terlalu memilih kerja
  • Minat ganjaran yang tidak setimpal dengan produktiviti
  • Tidak bersedia belajar kemahiran baru dan kerja pelbagai tugas
  • Sukar menerima sistem kerja baru
  • Mementingkan masa untuk riadah dan keluarga

Bruno Periera

slide28
Facts not mentioned are:
  • that the wages and benefits are intentional made unattractive,
  • with unfair and archaic terms and conditions of service (Pre-Employment Act era).
  • The silent protest.

Bruno Periera

slide29

Breakdown of types of Employment contract in an American Semiconductor Assembly Plant of semi-skilled workers and Production Operators in Dec 2007

Breakdown of types of Employment contract in an American Semiconductor Assembly Plant of semi-skilled workers and Production Operators in Dec 2007

Bruno Periera

purpose of company
PURPOSE OF COMPANY
  • to make profit.
  • Corporate headquarters sets target – that labour cost should not exceed 6% of the manufacturing cost.
  • Hiring foreign workers will escalate cost of labour by 30%.

Bruno Periera

slide32
Local Management to achieve the target –

Wages & benefits are controlled :

  • to subsidise the 30% additional labour cost in hiring foreign labour.
  • maintain the 6% labour cost.
  • without affecting the company’s bottom line profit.

Bruno Periera

race to the bottom unabated
Race to the Bottom…unabated

Leading to current reality…..

  • wages & benefits of the local workers are depressed artificially.
  • type of employment contracts have deteriorated progressively

replace local permanent contract

with foreign contract labour.

substitute with local contract labour

  • Standard of living deteriorates while cost of living escalates.

Bruno Periera

company achieves
Company achieves:
  • Low wage cost.
  • Disposable labour - hire & fire.
  • Flexi-labour – Multi-skilling/Multi-tasking.
  • Plug & play workers. (minimal training)
  • No union (No negotiation powers)
  • Subservient workforce.
  • Convert workers wages into profits.
  • Huge wages & bonus payout- Top Mgmt

Perlumbaan menuju ke dasar …….

Bruno Periera

slide35
High contract labour % improvesNAV (Net Asset Value) of company.
    • by transferring labour cost to overhead / operation cost putting Company’s stock price looking good to shareholders.
    • Creative accounting.

Bruno Periera

q a discussion
Q&ADiscussion

Bruno Periera

problem solving technique
Problem solving technique.

INVESTIGATE (Past):

  • How did the problem start?
  • Who started the problem?
  • When did the problem start?
  • Why did the problem start?
  • Where did the problem start?

-------------------------------------------------------------

PLAN OF ACTION (Future):

  • How to overcome the problem?
  • Who overcome the problem?
  • When to overcome the problem?
  • Why should we overcome the problem?
  • Where to begin the change?

Bruno Periera

slide38
HOW IT ALL STARTED?

It always starts small…….

and grows ….. and grows………

finally accepted as NORMAL

Bruno Periera

pekerja asing pa
PEKERJA ASING (PA)

LATAR BELAKANG

1992- Kerajaan meluluskan PA daripada

ASEAN, Bangladesh, India dan Sri Lanka

untuk sektor pembinaan dan perladangan.

  • 2000 - Diperluaskan kepada sektor perkilangan

dan perkhidmatan (hotel dan restoran).

  • 2002 - Meliputi semua sector

Sumber: Laporan Pesidangan Meja Bulat Mengenai

Penggajian PA Di M’sia - 5-Apr 2007 ISMK - KSM

Bruno Periera

outsourcing membekal mengurus
OUTSOURCING(MEMBEKAL & MENGURUS)
  • 2005 –

Mesyuarat Jawatankuasa Kabinet mengenai Pekerja Asing (JKK-PA) ke-33 Bil. 2/2005 pada 5 Julai 2005 telah BERSETUJU untuk menggaji PA melalui konsepOUTSOURCING.

Sumber: Laporan Pesidangan Meja Bulat Mengenai

Penggajian PA Di M’sia - 5-Apr 2007 ISMK - KSM

Bruno Periera

slide41
Outsourcing concept:

Outsourcing is a concept where the management and supply services are undertaken by companies selected by the government. The government shall select and supervise these companies who are reliable to be responsible to recruit, supervise and manage foreign workers and present the workers to customers who need them under the outsourcing concept.

  • Aim:

The implementation of outsourcing aims to assist to overcome the problems of shortage of workers and small companies who do not have the resources to manage foreign workers full time will save cost. It will also help companies/management who needs large workforce from time to time especially to fulfill additional increase in contractual obligations, for peak seasonal collection of harvest and so on.

  • Management:

The management of foreign workers shall be managed in an orderly and systematic manner. Accommodation, transportation, payment of wages of RM400, medical examination including insurance coverage shall be under the outsourcing company.

Sumber:Laporan Pesidangan Meja Bulat Mengenai Penggajian PA Di M’sia - 5-Apr 2007 ISMK - KSM

Bruno Periera

slide42
2006 – Terdapat jumlah 1,800,000PA

Negara sumber utama:

  • Indonesia 1,174,000 (63%)
  • Nepal 214,000 (11%)
  • India 138,000 ( 7%)
  • Myanmar 109,000 ( 6%)
  • Vietnam 106,000 ( 6%)
  • Bangladesh 63,000 ( 3%)
  • Lain-lain 64,000 ( 4%)

Bruno Periera

slide43
Pembahagian PA mengikut sektor
  • Pembuatan - 646,000 (35%)
  • Perladangan - 354,000 (19%)
  • Pembantu Rumah - 311,000 (17%)
  • Pembinaan - 268,000 (14%)
  • Perkhidmatan - 167,000 ( 9%)
  • Pertanian - 123,000 ( 7%)

Jumlah PA = 1,800,000 (100%)

Bruno Periera

impak pekeja asing
IMPAK Pekeja Asing
  • Dari Segi Ekonomi:

Kesan Positif:

  • Menyumbang RM 17b (5.1%) kepada KDNK
  • RM 8.3b (5.2%) kepada perbelanjaan persendirian
  • RM 1.2b levi kepada hasil kerajaan (2004)

Sumber: Laporan Pesidangan Meja Bulat Mengenai

Penggajian PA Di M’sia - 5-Apr 2007 ISMK - KSM

Bruno Periera

slide45
Kesan Negatif:
  • Remit RM 5-7b setahun ke negara asal
  • Kos perkhidmatan kesihatan RM117j
  • Kemunculan semula penyakit tibi, malaria dan untut serta membawa penyakit baru seperti kala azar (Leishmaniasis).
  • Mengurangkan tekanan kepada majikan bagi memperkenalkan automasi dan mekanisasi
  • Mengurangkan tekanan ke atas kenaikan gaji

Sumber: Laporan Pesidangan Meja Bulat Mengenai

Penggajian PA Di M’sia - 5-Apr 2007 ISMK - KSM

Bruno Periera

slide46
Dari Segi Sosial:
  • Kesatuan sekerja terancam
  • Mengekang kadar upah dan jejas peningkatan taraf hidup rakyat
  • Menjejaskan kerukunan sosial

Sumber: Laporan Pesidangan Meja Bulat Mengenai

Penggajian PA Di M’sia - 5-Apr 2007 ISMK - KSM

Bruno Periera

slide47
Keselamatan Negara:
  • Peningkatan kes jenayah dari 1333 (1992) kepada 3113 (2002) – 133%
  • Kos menjaga PA di penjara dan pusat tahanan
  • Kos menghantar pulang PA

Sumber: Laporan Pesidangan Meja Bulat Mengenai

Penggajian PA Di M’sia - 5-Apr 2007 ISMK - KSM

Bruno Periera

demographics dept of statistics 2006
Demographics (Dept. of Statistics, 2006)
  • POPULATION 26.63m

- Women 13.07m

- Men 13.56m

  • EMPLOYMENT 10.9m

- Private sector 5.2m

- Public sector 1.1m

- Informal sector 4.6m

  • Labour Participation rate:

- Women 46% 4.0m

- Men 86% 6.9m

  • UNEMPLOYMENT 3.5%

Bruno Periera

slide49
Percentage of Foreign Workers against Private sector employees:

1.8m/5.2m = 34.6%

Sumber: Laporan Pesidangan Meja Bulat Mengenai

Penggajian PA Di M’sia - 5-Apr 2007 ISMK - KSM

Bruno Periera

slide51

Malaysian Trades Union Congress

LABOUR BULLETIN July 2008

  • New Straits Time - July 20, 2008
  • interview with Datuk Ishak Mohamed,
  • Enforcement Director Immigration Department
  • Q: Should foreign labour outsourcing be banned?
  • A: Outsourcing is the best solution for the government
  • to manage foreign workers.
  • Q: Why?
  • A: There are two scenarios
    • One is that as companies get bigger, they will need more manpower and with outsourcing they can get workers in a more organized way.
    • Two, outsourcing is good as it will attract foreign direct investment. Investors will not want unions to be formed in their establishments.
  • Through outsourcing, it would be difficult for unions to be formed as outsourcing company, and not the factory, would be the employer.

Bruno Periera

slide52
Monday, September 21, 2009, 02.03 PM

Labour director-general Datuk Ismail Abdul Rahim

said yesterday.

We have introduced a quota system, where for

  • the manufacturing sector dealing in exports it is two foreigners to one local and
  • one local to one foreignerfor all other sectors," he said.

Bruno Periera

slide53

Cabinet Committee on Foreign Workers and Illegal Workers.

Deputy PM: Tan Sri Muhyiddin Yassin.

  • “The Laboratory*, had been directed to put outsourcing companies under the microscope to ensure that they stick to their role as providers of workers and NOT as EMPLOYERS”.
  • 277 registered outsourcing companies.
  • Laboratory – 8 ministries and 15 agencies.

The Star Tue 23-Feb 2010

Bruno Periera

slide54

Malaysian Labour Markets

Labour Market :

  • Regulated by Employment laws.
  • Employer to submit returns (S62 EA) – statistics
  • Do not include outsource / contract workers
  • Transparent.

Labour Black Market :

  • Not sanctioned by law.
  • Statistics not available.
  • Involves outsource / contract workers.
  • Existing parallel to Labour Market
  • Underground – illegal?

State of our Nation

Bruno Periera

slide55
Statement by

THE HONOURABLE DATUK DR.S.SUBRAMANIAM

MINISTER OF HUMAN RESOURCES, MALAYSIA

AT THE 98TH SESSION OF

THE INTERNATIONAL LABOUR CONFERENCE GENEVA.

THURSDAY, 11 JUNE 2009.

------------------------------------------------------------------------------

It is imperative that we take this crisis (Global Economic Crisis) as an opportunity to reaffirm our commitment to the principles of Decent Work and through such commitment the dignity and the rights of workers, as enshrined in the principles of Decent Work should continue to form the basis of the national agenda for our respective governments.In Malaysia, we have instituted high ranking tripartite monitoring mechanisms very much early in the crisis to ensure that the economic consequences of this crisis does not step on the rights of our workers as prescribed in the Constitution and in the laws of the country.

Bruno Periera

principles of decent work
Principles of Decent Work

Decent work is captured in four strategic objectives:

  • fundamental principles and rights at work and international labour standards;
  • employment and income opportunities;
  • social protection and social security; and
  • social dialogue and tripartism.
  • Decent work is central to efforts to reduce poverty, and is a means for achieving equitable, inclusive and sustainable development.

Bruno Periera

principles of decent work57
Principles of Decent Work
  • Decent work sums up the aspirations of people in their working lives. It involves
  • opportunities for work that is productive and delivers a fair income,
  • security in the workplace and social protection for families,
  • better prospects for personal development and social integration,
  • freedom for people to express their concerns, organize and participate in the decisions that affect their lives and
  • equality of opportunity and treatment for all women and men.

Bruno Periera

contract labour system is against decent work agenda
CONTRACT LABOUR SYSTEM is AGAINST Decent work agenda.
  • DOES NOT provide opportunities for work that is productive.
  • DOES NOT deliver a fair income.
  • NO security in the workplace and social protection for families.
  • NO prospects for personal development and social integration.

Bruno Periera

employment act in 195559
Employment Act in 1955
  • With the introduction of the EA, the then British Administration effectively abolished the indenture labour, bonded labour and the “kanggani” system in Malaya, as it was known then.
  • The totality of the Employment Act 1955 established two very important principles of law.
  • They are:
    • Security of tenure– ensuring permanence of job and
    • Proprietary right to the job– where termination of worker, shall be with just cause and excuse & by due process.
  • These principles are trite law and are considered sacrosanct.
  • MUST be protected at all cost!

Bruno Periera

selamat berjuang
Selamat berjuang

Bruno Periera

Bruno Periera