Employers should pay the levy, not migrant workers

comments     Charles Hector, Mohd Roszeli Majid & Pranom Somwong, on behalf of 89 groups     Published     Updated

We the 89 undersigned civil society organisations, trade unions and groups are shocked by the news that the Malaysian government is increasing the migrant worker (foreign worker) levy to more than double the current rate, which since January 2013, had to be paid by the migrant workers themselves.

Prior to that, it was paid by the employer of migrant workers, whereby the introduction of the levy then was to deter employers employing migrant workers, rather than local Malaysian workers. This was also stated by the then-Malaysian Labour director-general Ismail Abdul Rahim who was quoted saying that, “...The rationale behind getting employers to bear the levy was to discourage them from employing foreigners...” ( The Star , April 16, 2009)

Migrant worker levy rates drastically increased as of Feb 1, 2016

The Malaysian government recently announced that, as of Feb 1, 2016, annual levy payable for each migrant worker is increased to RM2,500 (manufacturing, construction and service sectors) and RM1,500 (plantation and agriculture).

Before this, the annual levy payable for a migrant worker in the manufacturing sector (RM1,250), construction sector (RM 1,250), plantation sector (RM590), agricultural sector (RM410) and services sector (RM1,250 to RM1,850) which was so much lower.

This new rates in comparison greatly burden the migrant worker in that the annual levy payable per migrant worker will now be doubled, or even tripled.

For example, a migrant worker in an electronic factory, classified under the manufacturing sector, who paid a levy of RM1,250 before, will now have to pay double, RM2,500. A worker earning a monthly minimum wage of RM900, which is the wage many migrants are paid, will now have to pay more than RM200 for levy, leaving them with only less than RM700 as their monthly wage, not taking into account all other wage deductions. This is most unjust.

It is unconscionable for the Malaysian government to target migrant workers in the hope of making extra income of RM2.5 billion for the country from the 2.1 million documented migrant workers in Malaysia to rescue Malaysia from its current financial woes.

Easily exploited with almost no access to justice makes migrant workers vulnerable to employers

When Malaysia introduced the minimum wage, employers and employer groups complained that their labour cost had gone up, and they could not afford it. In response, the Malaysian government decided that employers no longer need to pay the migrant worker levy, thus the obligation to pay the levy fell on migrant workers themselves.

Contract substitution remains a problem. Migrant workers agree to come to work in Malaysia, but when they start working, the migrant workers complain that they are now paid lower than what they had agreed to in their country of origin with the employer and/or his agent. Many employers have also used the minimum wage of RM900 as the standard wages they pay migrant workers.

Because of the debt incurred by migrant workers in coming to Malaysia to work, which is about RM5,000 and the practice of employers and/or agents holding on to their passports and work permits, migrant workers find themselves in a form of bonded labour, and not able to do anything else but just survive.

With the very low wages, they receive; many are forced into doing overtime sometimes four hours per day, working on rest days and even public holidays to make ends meet. Malaysian law stipulates a draconian overtime limit of 104 hours every month. This means, in effect migrant workers can be forced to work for 12 hours a day because in many workplaces doing overtime is no longer an option that workers can refuse.

As such, migrant workers and even local workers can be considered to be engaged in some form of ‘forced labour’.

For migrant workers, access to justice remains a myth for many. When they complain about rights violations, what happens in many cases is that they are terminated, and their permit to work and/or remain in Malaysia is also terminated. This causes migrant workers to be easily controlled and exploited cheaply. They do not even have the option to claim justice.

Employers contribute less to migrant workers income

Under the Malaysian law, employers are required to contribute 13 percent of the monthly income, inclusive of overtime earnings, to the Employees Provident Fund, this requirement is not applicable to the migrant workers. This makes migrant workers cheaper.

Further, since many employers do not take in migrant workers directly as their own employees, but take and use them as workers who are supplied by the labour suppliers - legally known as the contractors for labour - it effectively prevents these supplied migrant workers the right to join in-house trade unions.

Even if they do join national/regional unions, they simply will not be able to enjoy the extra rights and benefits that come by reason of a collective bargaining agreement between union and employer, simply by reason that they are not recognised as employees. Urgings for the abolition of the ‘contractor for labour system’ by trade unions and civil society have gone unheeded by the government.

Malaysia recognises that households earning less than RM4,000 a month requires financial assistance, and local workers do get a small assistance from the government through the BR1M programme - but migrant workers are excluded from this benefit.

Weakening ringgit causes migrants to earn 20-40 percent less

Whilst the financial problems Malaysia is facing, coupled with the increased cost of living - new taxes, increased transportation costs, and the weakening of the Malaysian ringgit in relation to currency of the country of origins of migrants - it is the migrant worker who suffers the most.

The weakening ringgit also means that the money migrant workers send back home to their families is now much less and this has a serious impact on their families/dependents and the ability to settle their debts back home.

It was recently reported, that “For instance, employees from Bangladesh used to make 44 taka for every RM1, but now it is about 17 taka. The drop is very drastic, more than 40 percent. Even the ringgit to the Indonesian rupiah has seen a drop in value by 20 percent.” ( The Malaysian Insider , Feb 5, 2016)

Unjust to impose new financial obligations on migrant workers already in Malaysia

It is totally unjust for Malaysia to impose new financial obligations by law on migrant workers, which did not exist when they agreed with their employers to come and work in Malaysia for three to five years. Any new obligations especially of payment by migrant workers should only apply to new migrant workers who have yet to agree to come to Malaysia to work - certainly not to those who are already here and working.

The Malaysian Trades Union Congress (MTUC) and employer groups have been informed that employers will now have to pay migrant worker levy. This was also mentioned in a media report, which stated, “The Federation of Malaysian Manufacturers (FMM) said the government recently informed employers that the levy burden would be shifted back to them.” ( The Star , Feb 2, 2016).

However, employer groups have started a campaign lobbying the Malaysian government to re-consider, and the Malaysian government has been reported as saying that they may re-consider. There is concern that this re-consideration may not just be about the amount of levy payable, but also the question as to who will have to pay the levy – migrant workers or their employer?

Therefore, we the undersigned

Urge the Malaysian government in the name of justice, to ensure that it must be the employers of migrant workers that should be paying this migrant worker levy - not the migrant workers;

Urge the Malaysian government to also reconsider the increase of the levy rate, at this time whilst Malaysia, and especially small Malaysian businesses, are affected by the economic crisis and the effect of the falling Malaysian ringgit.

Urge the Malaysian government to increase the minimum wage of all workers in Malaysia to RM1,200 to RM1,500, to compensate for the increased cost of living in Malaysia, and the falling value of the Malaysian ringgit with reference to the currency in migrant worker’s countries of origin.

Urge the Malaysian government to abolish the ‘contractor for labour’ system, and ensure that all workers that are working in a workplace are all recognised employees of the said workplace, and are treated equally as workers.

Charles Hector

Mohd Roszeli Majid

Pranom Somwong

For and on behalf of the 89 organisations, trade unions and groups listed below

Aliran

Alternative Asean Network on Burma (ALTSEAN-Burma)

Asia Monitor Resource Centre (AMRC)

Asia Floor Wage Alliance

Asia Pacific Forum on Women Law and Development (APWLD)

Association of Human Rights Defenders and Promoters - Myanmar

Asociación de trabajadoras del Hogar a Domicilio y de Maquila, ATRAHDOM, Guatemala, Centro Amercia.

Bangladesh Groep Nederland (Bangladesh Group The Netherlands)

Bangladesh Institute of Labour Studies - BILS

BLAST, Bangladesh

Boat People SOS (BPSOS)

Building and Wood Workers International (BWI) Asia Pacific Region

Campagna Abiti Puliti - Italy

CARAM Asia

Clean Clothes Campaign International Office (CCC)

Club Employees Union Peninsular Malaysia (CEUPM)

Coalition to Abolish Modern-day Slavery in Asia (CAMSA)

Crispin B Beltran Resource Center (CBBRC), Philippines

CWI Malaysia (Committee for Workers International)

Defend Job Philippines

Fair - Italy

FAIR ACTION, Sweden

Foundation For Women, Thailand

Garment and Allied Workers Union, India

German Clean Clothes Campaign

Homeworkers Worldwide, United Kingdom

IDEAL (Institute for Development of Alternative Living)

Industri All-Bangladesh Council (IBC)

Institut Rakyat

International Labor Rights Foruma

Jaringan Rakyat Tertindas (Jerit)

Jatio Shromik Federation (JSF), Bangladesh

Karmojibi Nari (KN), Bangladesh

Kesatuan Pekerja-Pekerja Perodua

Kesatuan Sekerja Industri Elektronik Wilayah Selatan, Semenanjung Malaysia (KSIEWSSM)

Knowledge and Rights with Young people through Safer Spaces (KRYSS)

Labour Behind the Label

Labour Studies and Action Centre (CEREAL), Mexico

Legal support for Children and Women (LSCW), Cambodia

Madpet (Malaysians Against Death Penalty and Torture)

Malaysian Election Observers Network

Malaysian Trades Union Congress (MTUC)

MAP Foundation (Thailand)

MHS Aviation Employees Union

Migrante International

Mission for Migrant Workers

Myanmar Migrants Rights Centre

NAMM (Network of Action for Migrants in Malaysia)

National Garment Workers Federation (NGWF), Bangladesh

National Union Employees in Companies Manufacturing Rubber Products (NUECMRP)

National Union of Transport Equipment & Allied Industries Workers (NUTEAW), Malaysia

NLD LA Malaysia

North South Initiative

Oriental Hearts and Mind Study Institute (OHMSI)

Panggau Sarawak

Paper Products Manufacturing Employees’ Union of Malaysia (PPMEU)

Parti Rakyat Malaysia (PRM)

Parti Sosialis Malaysia (PSM)

Pax Romana ICMICA

Peoples Service Organisation (PSO)

Persatuan Sahabat Wanita Selangor (PSWS)

Pertubuhan Angkatan Bahaman, Temerloh, Pahang, Malaysia

Proham - Persatuan Promosi Hak Asasi Manusia

Radanar Ayar Rural Development Association, Myanmar

Repórter Brasil

Safety and Rights Society, Bangladesh

Sahabat Rakyat

Schone Kleren Campagne (CCC Netherlands)

SEA Women's Caucus on Asean

Solidarity of Cavite Workers (SCW), Philippines

Sramik Nirapotta Forum, Bangladesh

Suaram

Tenaga National Berhad Junior Officers Union (TNBJOU)

Tenaganita Women’s Force, Malaysia

Textile Clothing and Footwear Union of Australia

The Collectif Ethique sur létiquette, Clean Clothes Campaign French

Think Centre, Singapore

UNI Global Union

War on Want

WARBE Development Foundation, Bangladesh

WH4C (Workers Hub For Change)

Women Peace Network-Arakan, Myanmar

Women Rehabilitation Center (WOREC), Nepal

Workers Assistance Center, Inc (WAC) , Philippines

Vietnamese Women for Human Rights

Yaung Chi Oo Workers Association-YCOWA

Yayasan Lintas Nusa, Indonesia

IMA Research Foundation, Bangladesh

International Trade Union Confederation (ITUC)

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