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Government contract system breeds poverty

Workers over many parts of the world are faced with a massive shift in their terms of employment, moving from more secure to informal, unpredictable jobs. This is the bitter gift of anti-worker neo-liberal policies that seek to increase profits for business by cutting income and safeguards for workers.

Despite the devastating effects of deregulation on workers (and the environment) everywhere, the Malaysian government has embraced it unreservedly.

In line with this, a large number of jobs, even those that defy the notion of contract, have been relegated to contract status. Motivated by the desire to earn more, contract jobs are crafted out of any kind of work.

The Malaysian government itself is the indirect employer of a huge number of contract workers, who have taken over certain categories of jobs once done by civil servants. Like contract workers everywhere, those in government departments take home less pay, have no increments, allowances or other benefits and endure worse conditions than their non-contract counterparts.

Their situation is made more precarious by government policy governing the award of contracts. The creation of business opportunities in the name of a skewed affirmative action policy, the practice of buying or rewarding political allegiance, and nepotism, all have led to the awarding of contracts based not on open tender but on political cronyism.

This has resulted in the winning of contracts by many incompetent, financially unstable individuals whose only qualification is their membership in the right political organisation. The plight of workers hired by such contractors is pitiful.

This is evidenced by the struggles of several groups of contract workers for the fulfillment of terms specified in their agreements, as well as by the findings of a survey conducted in a number of states, of contract cleaners and security guards at schools and state education departments under the Education Ministry.

Even though cleaning and security services are needed every day in Education Ministry premises, the government has abused the concept of contract work by making workers sign three-yearly contracts with contractors. So there are contract workers who have worked more than 10 years, reapplying afresh after the expiry of each term.

A cleaner may have worked for 12 consecutive years but will receive the same pay as a new worker, as there are no yearly increments for contract workers. Workers under the contract system have difficulty obtaining loans to buy houses, or even if they succeed, cannot be certain of making monthly payments, given the temporary nature of their contracts.

There are over 10,000 government schools in the country. On average, each school would employ about seven contract cleaners and security guards. While in a number of these schools, there must be decent contractors who comply with the contracts, it is rather revealing that over 80 percent of workers surveyed on an informal basis were being further squeezed by their contractors:

  • A number of contractors do not comply with the minimum wage act, and still pay less than RM900. In addition, some contractors are notorious for late payment of wages, with one school surveyed showing up to four months delay. Many contract workers also have not been paid the minimum wage arrears for 2013 and 2014.
  • Many contractors fail to make Employees Provident Fund (EPF) and Social Security Organisation (Socso) contributions, with some making deductions from workers’ wages and pocketing the money. Contractors contravene the Employment Act in many other ways, such as denying annual leave, underpaying overtime work, not issuing pay slips etc. These flagrant violations take place not only under the watch of school principals, but also senior officials of state Education Departments.

So workers who are doomed by the contract system to insecure, low income employment are further exploited by unscrupulous contractors.

The Education Ministry’s response to this problem is unbelievable. Their position is that the agreements are between the workers and the contractors, and thus they cannot be held accountable. The standard advice is for workers to file complaints at the Labour Office, which can be a thankless task. It is abhorrent that the government which is the culprit behind this exploitation of workers chooses to absolve itself by hiding behind technicalities.

Fear of victimisation

Many workers fear making complaints at the Labour Office while still working for fear of victimisation, which is a very real threat. Apart from that, the experience of workers who have taken the risk shows that the labour office route can be a waste of time and effort.

In one instance the security guards of a particular school, won their case for unpaid arrears at the Labour Court, but the contractor refused to pay. The next step was for them to go to the Magistrate’s Court to get an order. It meant more costs, and more time off work, and only another paper victory was certain.

In other instances, workers who have filed complaints have been frustrated by frequent postponements because of bosses who are absent for Labour Department conciliation meetings, and court proceedings.

EPF and Socso officials investigating complaints are often given the run-around by all kinds of deceitful tactics by contractors, such as giving wrong office addresses or blaming sub-contractors. What is obvious is that these contractors seem to enjoy a certain degree of immunity, reinforced no doubt by the reappointment of contractors with a terrible reputation.

It is one of the lofty ideals of the 11th Malaysia Plan to elevate the B40 Malaysian households ‘towards a middle class society’, by doubling the mean household income from the current RM2, 537 to RM5, 270 in the next five years.

If one of the government’s strategies to achieve this is the contract system as implemented in government departments, the 11th Malaysia Plan will remain just a dream. In its practice, by impoverishing a whole sector of workers by condemning them to the contract system, the government has contradicted itself on its avowed objectives of reducing poverty and fixing socio-economic disparity.

This situation has been further compounded by its poor management of the contract system - appointing cronies who scrounge off low-paid workers, and then turning its back on workers’ complaints.


RANI RASIAH is a central committee member of Parti Sosialis Malaysia (PSM).

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