How taxation can improve labouring communitys lives — Pt I
Departing from their traditional concerns such as collective bargaining or disputes in the workplace, Malaysian trade unionists gathered here in Kuala Lumpur on June 12 and 13 to discuss on a relationship of importance to workers' social protection: taxation and social development.
The national workshop was organised by the Malaysian Trades Union Congress. It is part of an ICFTU-Apro
(International Confederation of Free Trade Unions-Asian and Pacific Regional Organisation) initiative on "Taxation and social development", in which three other countriesIn addressing social safety nets and social development, an important aspect is, of course, funding: Who or how will social development be funded? Funding for social development, according to ICFTU-Apro, must be the responsibility of national governments and achieved through taxation.
With this focus, the ICFTU-Apro is conducting country case studies examining the issues of taxation and social development as well as carrying out national level workshops to discuss the issue with trade unionists. For Malaysia, MTUC played a key part.
While comparatively Malaysia has a reasonably well-developed social security system for the labouring community, the following observations offer a view of some critical issues that need reflection and closer attention.
- Caring society?
The social agenda of the various national policies in Malaysia (right from the New Economic Policy through National Development Policy to National Vision Policy) implicitly first, explicitly later, propose the creation of a "caring society". However, a careful examining of the actual state of affairs with particular reference to the labouring community, suggests that instead of moving towards a caring society, the nation is a moving towards a "high social risk society" (and a unjust one).
Social development policy is for all practical purposes located within the framework of Malaysia Incorporated . And Malaysia Incorporated works within a larger "economic growth framework", a framework highly influenced by the neo-liberal ideology, directed by the central tendency of capitalist development, i.e. profit making, wealth creation and its skewed distribution and concentration. In such an economic environment, economic security of businesses is more crucial than the social security of workers.
The premise on which the above is based on is that if the economy is dynamic, it will certainly benefit all citizens, including workers. However, growth and redistribution are two different issues. Because there will always be winners and losers in the economic growth model we adopt, we need comprehensive and sustainable wealth redistribution policies for all citizens to benefit.
While there was redistribution focus in the 1970s, the introduction of privatisation policy in the early 1980s sets the trend towards not only reduction of governmental inefficiency but also to reduction of the role of government in redistribution of wealth, an important social goal. With privatisation and economic liberalisation, the market is seen as more suitable to achieve redistribution to all citizens.
It is important to note here that Malaysia has among the highest income differential between the ratio of income share of the highest 20 percent and the lowest 20 percent of households in the region. A 1996 report also indicates that the income share of the lowest 40 percent of households is only 12.9 percent.
Recent studies also seem to indicate that privatisation has not really benefited individual citizens as much as corporate citizens.
The culture of privatisation (a mentality and a set of institutionalised practices) has spread out from the economy to social sectors. There is therefore a tendency to reduce the provision of social protection by the government and to shift the responsibility to the individual and the institution of the family. In fact, this is a central part of Vision 2020 and the caring society! Privatisation of social protection rather than its socialisation is the general tendency today.
While some argue that this is in the right direction, as the government cannot indefinitely support social safety net programmes, the government's role in strengthening the family institution is not exactly clear or focused.
(a) While there are a number of family-centred action programmes in place, they hardly commensurate with the kind of stress the family is exposed to today. Housing for the poor labouring community is not a priority for the government and studies show its poor performance in the area, hardly meeting the demand for low-cost housing. Housing for the poor is also much too politicised.
In addition, living space management within low-cost housing does not allow for a comfortable living space for an extended family, which indirectly encourages neglect of the older generation, and indirectly contributes to neglect of children in families where both husband and wife are working.
(b) Working hours are long with the result that breadwinners spend long hours in the economy and do not have the opportunity of spending quality time at home. A poorly protected post-retirement period, poorly regulated retrenchment, unemployment particularly not of one's own making, poorly protected workers in the informal sector, absence of unemployment benefits and the need for a double job to make ends meet all put major stress on the family.
(c) It is also not clear that decision-making power over the use of communal or collective resources, including financial resources, is actually shifting and ownership patterns towards individual workers or their families. Processes and policies to shape and strengthen a self-conscious civil society in which the family plays an important comprehensive role are almost non-existent in Malaysia.
For all practical purposes, the present emphasis of the privatisation process and indiscriminate marketisation seems to expose the family to high levels of social risks, hardly indicating a movement towards a caring society. The privatisation of healthcare, for instance, would certainly expose the poor to great health and social risks. (MTUC has been consistent in saying no to privatisation of healthcare.)
The economic strategy has moved from "redistribution with growth" to "growth with redistribution" to one with primarily "growth" focus. As mentioned above, one of the consequences of a high performing economy is the belief that social development will be taken care of "by itself".
However, the long-term sustainability of our economy in its present shape is questionable. Though the economy seemingly did well before the financial crisis with approximately eight percent growth, the 1997 financial crisis revealed many serious inherent weaknesses in the economic system like the near absence of any mechanisms for necessary and effective technology development to enhance competitiveness or the pervasive problems of transparency and corporate governance and cronyism.
The recent episode involving the withdrawal of investments by the pensions fund manager, California Public Employees Retirement System (Calpers), from Malaysia (in addition to Thailand, Indonesia and the Philippines) based on criteria such as transparency and productive labour practices seem to at least suggest that all is not well with the economy.
Our Corruption Perception Index is 5.6 ("0" being highly corrupt; "10" being highly clean) and we hold the 36th position in the Transparency International list (the first being super-clean). All these certainly hurt the economy and it seems to be a vulnerable and unsustainable one, placing workers in a precarious setting.
Tomorrow: Part II
M NADARAJAH is a sociologist by profession. He works on sustainable development issues and is presently the deputy co-ordinator of a virtual organisation called the Asian Communication Network, with an anchor in Bangkok, Thailand. The article is part of his country report for ICFTU-Apro and MTUC.
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