Problems relating to Trade and Investment on Malaysia
16. Employment |
|||
Issue |
Issue details |
Requests |
Reference |
| (1) Wage Hike by Large Margin caused by Introduction of the Minimum Wage System | - Under National Wages Consultative Council Act, "the Minimum Wage Order" is due for enforcement from 1 January 2013. The minimum wages are RM900 in the Peninsula Region, RM800 Sabah, Sarawak States and Federal Territory of Labuan. Impacted by this Order, enterprises drag their feet about new employment. - The hike in minimum wage (especially on Foreign Workers): MR600 => MR900. - The introduction of minimum wage scheme (MWS) since January 2014 has resulted in labour cost increase mainly for workers in the production site. It is said review of MWS takes place in every two years. Future increase in labour cost is a matter of serious concern. - It looks like the minimum wage shortly established will be quite substantial in amount (700-1,200KRM/Month). The problem of minimum wage is the nebulous definition of the basic salary. Depending on the definition of the term, it could mean the wage hike of 30-40% and bears heavily upon business operation. In the industrial world, review takes place now on various allowances that can be framed into the minimum wage, and the possibility of requesting postponement of implementation. --> Across all Malaysia about 400 enterprises (of which 40 are Japanese affiliates) obtained the postponement permission. On the other hand, GOM is considering making workers responsible for surcharge, etc. for which employers have been responsible, to account for the increased burden upon employers. => January 2013 Update: Since January 2013, minimum wages (amendment) order 2013 has been in force. Minimum wages are: Peninsula: RM900, Sabah/Sarawak: RM800. Incorporation of various allowances into the minimum wage, as to application for postponement of implementation, responsive action has been taken in coloration with regional headquarters enterprises. In addition, minimum wage legislation applies also to foreign workers, heavily burdening enterprises that have foreign workers on the payroll. GOM, in response to the enterprises' request, debates over whether to hold foreign workers responsible for levy payment (foreign workers' employers' defrayment). There remain risks for sabotage, etc., should the workers be held responsible for the levi payment. --> June 2013 Update: It has been decided to hold foreign workers responsible for levi payment. - While revision of minimum wage is under plan, further wage increase is a matter of huge concern to business operation of private enterprises, for loss of international competitive edge (, as well as increment of enterprises retreating from Malaysia.) |
- It is requested that GOM controls wage increase as GOM's action can debilitate the international competitive edge of the Malaysian industries. - It is requested that GOM holds down and avoids the rapid radical labour cost increase. - It is requested that GOM: -- establishes minimum wage not across the board statewide/lines of work, but individually by regions/lines of work, -- foregoes establishing minimum wage or establishes fitting the actual state of affairs. - It is requested that GOM: -- takes a good grasp of the status of life of workers in low-income bracket, and -- takes a careful step over the debated issue. |
- Minimum Wage Law (enforced on 1 January 2013) |
| (Action) - On 6 July 2009, Dr. S. Subramaniam, Human Resources Minister made it clear that he was contemplating introduction of the minimum wage system in 4-sectors, textiles, electronics, hospitality service, and security guard. - On 16 July 2012, The Minimum Wage Order 2012 was gazetted. This Order comes into operation on 1 January 2013 in relation to an employer who employs more than five employees on more, and an employer who carries out a professional activity classified under the Malaysia Standard Classification of Occupations (MASCO). The minimum wages are RM900 (RM4.33 per hour) in Peninsular Malaysia and RM800 (RM3.85 per hour) in Sabah/ Sarawak and the Federal Territory of Labuan. (Governing Law: The National Wages Consultative Council Act 2011 [Act 732]) (http://www.federalgazette.agc.gov.my/outputp/pua_20120716_P%20U%20%28A%29%20214-%20Perintah%20gaji%20minimum.pdf). - Since 1 January 2014, Minimum Wages Order 2012 has been implemented in full. - On 23 October 2015, Malaysian legal minimum wage revision was announced for the first time: Malay Peninsula from the current MR900 to MR1,000 (about USD235), in east Malaysia from MR800 TO MR920 (about USD216). - On 2nd May 2016, Ministry of Human Resources announced the minimum wage hike from the current MR900 to MR1000. the wage hike rate in Malaysian Peninsula comes to 11.1%. |
|||
| (2) The Restricted Number and Job Positions of Expatriates | - In the upstream petroleum industries, GOM severely controls the number of expatriates and their positions. Therefore, it might be necessary for MFSs to deploy local staffs for positions beyond the level of their technical skills and competency. | - It is requested that state owned company Petronas: -- understands the problems described in the left column, and -- deregulates the restrictions. |
- The Model Production Sharing Contract (PSC) |
| (3) Delayed Issuance Procedures of Expatriates' Work Permit | - Immigration Department of Malaysia (IDM) has introduced the statewide new system on issuance of work permit. To this date since its introduction, due to the frequent system troubles one after another, work permit issuance has delayed frequently. Expatriates without work permit are treated just the same as tourists, being unable to open bank account, etc., severely affecting expatriates' effort to settle down in the new environment. | - It is requested that IDM improves the system operation to allow a reasonably speedy issuance of work permit (particularly at the Peninsula side of the immigration bureau). | |
| (4) Intensified Foreign Workers' Employment Control, delaying Licence Issuance Procedures | - GOM has tightened foreign workers employment control and employment of foreign workers has become more and more difficult. On the other hand, employees' retention rate remains low, even after introduction of minimum wage control, a set of affairs continue, whereby employers have no alternative but to rely upon foreign workers for the sake of ensuring stable business operation. Fostering of Malaysian human resources to secure workforce and deregulated foreign workers employment rules are both necessary. - GOM continues to exercise its control on foreign (direct) workers' employment, and so does difficulty continue to employ foreign workers and to obtain the corresponding permits. GOM also continues its efforts to attract entry of FFEs into Malaysia with the likely further aggravation of workforce shortage. Deregulation of foreign workers' control is necessary. -- In June 2011, GOM announced amnesty programme that legalises illegal foreign workers staying in Malaysia, said to be a little short of 2-million people. -- Foreign workers' new employment was frozen during "the legalisation procedures period" (which delayed, by large margin, from the original 15 September 2011 to 10 April 2012, the date finally determined.) The workforce shortage surfaced, mainly in manufacturing and construction sectors, due to the freeze on new employment. --On 10 April 2012, along with the cut off of the legalization programme, the freeze was removed.on the new employment -> In April 2012, while the freeze on new employment was removed, there continued numerous cases, where it took a long time for approval of new foreign workers, or approval was unobtainable for the sufficient number of new employees. =>Renewal in June 2013: While problems were more or less resolved in urban areas on employment of foreign workers, in local areas, it continues to take a long time for foreign workers licence acquisition, or otherwise the numbers approved were less than the numbers requested. =>In January 2014: PMAM, PMMA (local powerful employment agencies) reported completion of improvement, while PASMY, PSNM reported improvements, they expressed their wish for continuation of smooth procedures. |
- It is requested that GOM: -- fosters Malaysian human resources to secure workforce, and -- deregulates foreign workers employment rules. - It is requested that GOM: -- clarifies the standard and simplifies the application/approval procedures, -- in particular, improves government employees' response. |
|
| (Action) - On 11 March 2016, by cabinet decision, new employment of foreign workers except for maids was suspended and enforced. |
|||
| (5) Extension of the Retiring Age | - "Minimum Retirement Age Act 2012", providing that "the Minimum Retirement Age of an employee shall be upon the employee attaining the age of sixty-years" in private enterprises, is due for enforcement from 1 July 2013. While GOM's intention is to improve employers' treatment of their workers, some voices the need for considering the impact upon the business management in its implementation at the time of the severest world economy. Moreover, others are afraid that the moratorium period is too short, so that it will dilute the competitive edge of the domestic industries. | - Labour Act |
|
| (6) Insufficiency of the Period for Transfer of Duties for Employees in Private Sectors | - In the case where an employee in a private sector gets transferred to government institutions, various inconveniences result from the excessively short period allowed for transfer of duties. (Order received upon adoption decision required the applicant's showing up at office from next week). | - It is requested that government institutions: -- make it compulsory to allow minimum one-month from the adoption decision when accepting transferred staff from private enterprises, and -- make it possible for the private enterprises to arrange for successors and transfer of duties. |
|
<<BACK |