Rebalancing Labor Market and Industrial Policies, Addressing Inequalities, inclusive Social Protection, Industrial Policies and Labor

Markets in Malaysia

by
Executive Director, Malaysian Employers Federation
Regional Workshop on Social Inclusiveness in Asias Emerging Middle Income Countries

Hj. Shamsuddin Bardan

13 September 2011, Jakarta, Indonesia

Demographic and Labour Market Statistics

2008 Population (million persons) Labour Force (million persons) Employed (million persons) Unemployed (% of labour force) 27.5 12.0 11.6 3.3 2009 27.9 12.1 11.6 3.7 2010 28.3 12.2 11.8 3.2 2011 28.6 12.5 12.1 3.2

As reported by The Star at 6-09-2011:

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2,320,034 foreign workers registered under 6P Amnesty Programme

1,016,908 Legal foreign workers 1,303,126 Illegal foreign workers

MALAYSIAN EMPLOYERS FEDERATION

Employers Concern on Management of FWs

Continued dependance on FWs

3Ds jobs local employees not interested Limited mechanisation in:

Plantation/Agriculture Construction Services cleaning

Employers should not be paying levy of FWs Outsourcing companies should be abolished Need for clear and transparent policy on recruitment and employment of FWs

MALAYSIAN EMPLOYERS FEDERATION

MoHR Proposed Components of Labour Safety Net

Job Search Job Placement Training

Up-skilling

Job Relocation

Unemployment Income Relief

Accident and Disability Benefits

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Old Age Benefits

MALAYSIAN EMPLOYERS FEDERATION

MEF Views on Proposed Labour Safety Net

Proposed Labour Safety Net

Duplication with existing mechanisms

All components of labour Safety Net are in place except Unemployment Income Relief

MALAYSIAN EMPLOYERS FEDERATION

Job Search and Job Placement

Job search and Placement

Job Malaysia http://www.jobsmalaysia.gov.my/

automated online job matching service provided by MoHR no fees required in any registration/application

Job Placement

Job Placement System For Persons With Disabilities (PWD)

Private job portals JobsMalaysia-APS (Agensi Pekerjaan Swasta) Link Up

Private Employment Agencies (APS) registered with Labour Department may advertise job vacancies available from their agencies and clients who uses their services via JobsMalaysia facilities

MALAYSIAN EMPLOYERS FEDERATION

Training and Upskilling

Training and upskilling

Aim :strategic fit between manpower demand and supply improving labour market flexibility, mobility and responsiveness Human Resource Development Act 1992 ensure companies continuously train and upgrade their employees skills through compulsory contribution of 1% of monthly wage bills to the Fund established to grant skills training loans to trainees of approved skills training programmes, especially those based on NOSS No. training institutions accredited with Department of Skills Development 979 (July 2011)

Human Resource Development Fund (HRDF)

Skills Development Fund (SDF)

Private institutes 613 Government institutes - 345

MALAYSIAN EMPLOYERS FEDERATION

National Dual Training System (NDTS)

Training scheme similar to dual training system in Germany Implementation of NDTS commenced in 2005

intake of of 29 apprentices by DaimlerChrysler (Malaysia) and 14 apprentices by NAZA Automotive Manufacturing for Automotive Mechatronics.

Training programmes based on stipulated guidelines and regulations and National Occupational Core Curriculum for the occupation (MLVK, 2005a). By December 2009, about 22,000 apprentices completed or are undergoing training programmes under NDTS, involving about 1,000 different companies.
Source : BACKGROUND PAPER FOR MALAYSIA: SKILLS DEVELOPMENT IN THE WORKPLACE IN MALAYSIA , ILO/SKILLS-AP/Japan Regional Technical Workshop and Study Programme on Skills Training in the Workplace Overseas Vocational training Association, Chiba, Japan 1-5 February 2010

MALAYSIAN EMPLOYERS FEDERATION

What should be done? Skills Certification System

There should be a recognised standardised skills certification system National Occupational Skills Standards (NOSS) should be accepted as the certification system and skills training providers must conform to NOSS Skills certification will encourage employees to take up multiskilling and multitasking, which will improve productivity and competitiveness On-the-Job Training as a basis of certification?

MALAYSIAN EMPLOYERS FEDERATION

Licensing of Occupations ?

Currently only some professional and semi professional jobs require licensing

E.g. lawyers, engineers doctors, nurses

Should occupations be licensed?

To address :

Qualifications/skill level Quality of work Insurance coverage Income level

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MALAYSIAN EMPLOYERS FEDERATION

Job Relocation

Section 63 - Employment Act 1955

provides for notification of retrenchment to MoHR

Job placement advised and managed by Labour Department

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MALAYSIAN EMPLOYERS FEDERATION

Accident and Disability Benefits

SOCSO was set up to administer, enforce and implement Employees Social Security Act 1969 Provides two insurances:
1.

Employment injury:

Protection for employees for accidents which occur while working commuting from home to work place; commuting from work place to place where employee takes his meal or travelling on a journey directly related to his work Also covers occupational diseases

2.

Invalidity pension benefit:

60% of wages (subject to wages not exceeding RM3,000 per month) Invalidity grant Survivors pension Constant attendance allowance Funeral benefit Rehabilitation benefit Education benefit

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Old Age Benefit

Old age benefit:

Private sector

Employees Provident Fund (EPF) savings

Contribution Employer 12% ; Employee 11%

Question: Adequacy of savings - 75% have less than RM50,000 at age 55

Retirement fund voluntary Gratuity Pension + Gratuity EPF

Public sector

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MALAYSIAN EMPLOYERS FEDERATION

Unemployment Income Relief

Unemployment income relief :

Termination Benefits Regulation 6 Employment (Termination and Layoff Benefits) Regulations 1980 Survey - > 1 month for every year of service

Best form of unemployment insurance is to remain in employment

3.2% unemployment rate - is of choice Quick survey by Government:

A total of 1,051,427 job vacancies listed by eight ministries and related agencies to be filled by Malaysians before offering to illegal immigrants granted amnesty under the Government's legalisation programme
- The Star 24 August 2011

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MALAYSIAN EMPLOYERS FEDERATION

Unemployment Insurance

Unemployment insurance proposal by National Economic Action Council (NEAC) - Strategic Reform Initiative (SRI) under Economic Transformation Programme. MEF strongly objected and submitted that Government should use allocated RM80 million to pay retrenched employees that had not been paid retrenchment benefits. MEF survey

about two-thirds of employers gave feedback that unemployment insurance would increase cost of doing business and reduces liquidity of companies. Majority viewed present labour laws as sufficient

Most developed countries with unemployment insurance find it difficult to sustain scheme which eventually make it necessary to push retirement age to higher levels.

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MALAYSIAN EMPLOYERS FEDERATION

Elements of an Unemployment Insurance Coverage, Qualifying Conditions, Benefits, Funding, Admin.

Coverage Qualifying Conditions Benefits Structure

ILO definition of employment

and unemployment.

Define the minimum number of

contributions needed to qualify. except for misconduct.

Payouts represent partial

Mandatory for covered

population, voluntary for selfemployed. including foreign workers, persons with disabilities etc. wage levels, occupation types, employment types and others. Justifications for such filters to be provided.

Involuntarily retrenched qualify, Must register with a designated

employment agency (JTK) and report periodically.

unemployment income relief for limited duration. and training programs as well as other employment services such as job search and placement assistance.

Must be supported by up skilling

Entire working population,

Coverage criteria include

To enjoy continued UI payments,

fulfill conditional requirements such as training, job up skilling, job search and placement.

MEF Comments

Not practical and a lot of duplications with existing legislations and provisions of collective agreements.
MALAYSIAN EMPLOYERS FEDERATION

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National Minimum Wage

MEF view:

To create a high income economy, efforts should be made to raise income as a whole and not only at the lowest level Wages should be determined by market forces and linked to performance and productivity Government should not interfere and dictate in fixing level of wages in private sector by introducing national minimum wage.

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MALAYSIAN EMPLOYERS FEDERATION

National Minimum Wage

MEF urges Government to adopt a policy that:

instil confidence among local and foreign investors assist companies increase competitiveness, help to create and preserve jobs, minimise retrenchment, and reward employees based on productivity and performance. ensure wage increases lag behind productivity growth and take into account company profitability, the performance of the individual employee and enable organisations to respond quickly to changing economic and business conditions.

Setting up national minimum wage will also detrimentally impact small and medium enterprises

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MALAYSIAN EMPLOYERS FEDERATION

National Minimum Wage

No guarantee of job creation in countries where national minimum wage is implemented

Philippines unemployment rate in 2010 was 7.3% and 7.1% in Indonesia (Malaysia 3.2%)

Implementation of national minimum wage only force employers to pay higher wages and salaries not linked to skills, performance and productivity Higher wages would be meaningless with high rate of inflation and erosion of purchasing power Introduction of national minimum wage will only benefit low-level jobs usually performed by foreign workers

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MALAYSIAN EMPLOYERS FEDERATION

National Wages Consultative Council (NWCC)

MEF proposed setting up of NWCC to periodically deliberate on wage and issue guidelines on wage related matters:

adoption of productivity or performance-linked wage system, taking into account relevant factors such as national, regional and international economic performance and outlook MEF envisioned NWCC to provide guidelines on cost competitiveness vis--vis other countries; labour market conditions; and productivity and rewards for employees. NWCC should study trend of wages and recommend appropriate policy direction in order to increase per capita income from RM21,304 to RM51,739 in 2020.

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MALAYSIAN EMPLOYERS FEDERATION

National Wages Consultative Council (NWCC)

Government tabled in Parliament National Wages Consultative Council Bill which was passed by Dewan Rakyat and Dewan Negara

NWCC to make recommendations on minimum wage rates and coverage based on industrial sectors, types of employment and regions. Collect and analyse information and conduct research on wages and socio-economic indicators; and coordinate, supervise and evaluate the impact of its implementation. Five employer representatives in NWCC to be appointed by Minister of Human Resources.

MEF persuade Government to make necessary changes for enhancement of productivity and competitiveness and not just purely establishing national minimum wages Policy of high-income economy should be achieved through system of skills certification where skills of employees are linked to their wages. Malaysia to focus on how to improve wages and workers' incomes and not struggle for lowest wages to be paid to employees.
MALAYSIAN EMPLOYERS FEDERATION

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