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Current Labour situation

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Title: Current Labour situation


1
  • Current Labour situation
  • in Malaysia
  • Malaysia - 2010

2
  • place of employment means
  • any place where work is carried on for an
    employer by an employee
  • employee means
  • any person or class of persons
  • included in any category in the First Schedule to
    the extent specified therein or
  • (b) in respect of whom the Minister makes an
    order under subsection (3) or section 2A

EMPLOYMENT ACT 1955
3
EMPLOYMENT SENARIO Place of employment
  • Types of EMPLOYERS
  • Types of WORKERS
  • Types of CONTRACTS

4
Types of EMPLOYERS
  • employer means any person who has entered into
    a contract of service to employ any other person
    as an employee and includes the agent, manager or
    factor of such first mentioned person, and the
    word employ, with its grammatical variations
    and cognate expressions, shall be construed
    accordingly

EMPLOYMENT ACT 1955
5
  • Principal means any person who in the course of
    or for the purposes of his trade or business
    contracts with a contractor for the execution by
    or under the contractor of the whole or any part
    of any work undertaken by the principal
  • Contractor means any person who contracts with
    a principal to carry out the whole or any part of
    any work undertaken by the principal in the
    course of or for the purposes of the principals
    trade or business
  • EMPLOYMENT ACT 1955

6
  • Sub-contractor means any person who contracts
    with a contractor for the execution by or under
    the sub-contractor of the whole or any part of
    any work undertaken by the contractor for his
    principal, and includes any person who contracts
    with a sub-contractor to carry out the whole or
    any part of any work undertaken by the
    subcontractor for a contractor
  • Sub-contractor for labour means any person who
    contracts with a contractor or sub-contractor to
    supply the labour required for the execution of
    the whole or any part of any work which a
    contractor or sub-contractor has contracted to
    carry out for a principal or contractor, as the
    case may be
  • EMPLOYMENT ACT 1955

7
LOCAL Workers seeking employment
Local WORKERS
Direct Application (or walk-in)
Job Malaysia MOHR JTK
Private Employment Agency
PRIVATE EMPLOYMENT AGENCY ACT 1981 20 commission
of 1st Months wage charged on placement. Paid
either by employer or the worker.
PLACEMENT
FACTORY (Principle Employer)
Temporary (FIX TERM) contract
PROBATION followed by PERMANENT Contract
8
Migrant WORKERS
MIGRANT Workers employment
EMPLOYMENT (RESTRICTION) ACT 1968 Non-citizen
shall not be employed unless there has been
issued valid employment permit.
Contract of Service/ Temporary (FIX
TERM) contract
FACTORY (Principle Employer)
9
NOW.LOCAL Workers also follow the same flow!
Migrant WORKERS
MIGRANT Workers employment
Contract of Service/ Contract for
Service Temporary (FIX TERM) contract
No Law to regulate? Outsourcing License No.,
Recruitment No. KHEDN.
Labour Contractors (Outsource Company)
Labour Contractors (Outsource Company)
TODAY
Labour Contractors (Outsource Company)
FACTORY (Principle Employer)
TOMORROW
FACTORY (Principle Employer)
FACTORY (Principle Employer)
THE DAY AFTER
10
Workers seeking employment
Workers seeking employment in Malaysia
Migrant WORKERS
Local WORKERS
Contract of Service/ Contract for
Service Temporary (FIX TERM) contract
NEW EMPLOYER
RM wages
Job Malaysia MOHR JTR
Direct application
Private Employment Agency
Placement
CONTRACTOR (Outsource Company)
FACTORY (Principle Employer)
RM wages
FACTORY (Principle Employer)
TODAY
FACTORY (Principle Employer)
TOMORROW
PROBATION followed by PERMANENT Contract
Temporary (FIX TERM) contract
FACTORY (Principle Employer)
THE DAY AFTER
11
Types of WORKERS
  • Employed directly by Employer or Principal
  • Permanent workers
  • Local contract workers (Fix-term)
  • Foreign contract workers  (Fix-term)
  • --------------------------------------------------
    --------------------------------------------------
    --------------------------
  • Supplied by Labour Contractors but work for
    Principal employer PAID BY Labour Contractor
  • Local contract workers (Fix-term)
  • Foreign contract workers (Fix-term)

12
Types of CONTRACTS
  • 1. Employment Contract is a CONTRACT OF SERVICE
  • (Kontrak Perkhidmatan)
  • 2. Service Contract is a
  • CONTRACT FOR SERVICE
  • (Kontrak untuk Perkhidmatan)
  • (not an employment contract)

13
Contract OF Service (Kontrak Perkhidmatan)
  • Any agreement between two parties an employer
    and an employee, where by
  • The employer agrees to employ another as an
    employee and the employee
  • agrees to undertake certain duties under the
    direction and control of the employer.
  • agrees, in return for a specified wage or salary
    and benefits under a terms conditions of
    employment from employer.

14
Terms and Conditions of Employment
  • The employer cannot change the terms and
    conditions of employment unless employee agrees
    to it.
  • Any terms and conditions, in a contract of
    service, that is less favourable than the
    relevant provision under the Employment Act
    (1955) is illegal, null and void.
  • Provision in the Act will take precedence over a
    particular contractual term that is less
    favourable.

15
  • An apprenticeship contract or agreement is also
    considered a contract of service
  • Agreement, whether oral or in writing and whether
    express or implied.
  • Oral contract in writing? How?

16
Employment Act in 1955
  • With the introduction of the EA, the then British
    Administration effectively abolished the
    indenture labour, bonded labour and the
    kanggani system in Malaya, as it was known
    then.
  • The totality of the Employment Act 1955
    established two very important principles of law.
  • They are
  • Security of tenure ensuring permanence of job
    and
  • Proprietary right to the job where termination
    of worker, shall be with just cause and excuse
    by due process.
  • These principles are trite law and are considered
    sacrosanct.
  • MUST be protected at all cost!

17
Types ofContract OF Service (Kontrak
Perkhidmatan)
  • Permanent Contract (permanent workers)
  • Direct hire (Company workers)
  • - local workers
  • Fixed Term Contract -
  • (temporary or contract workers)
  • Direct hire   (Company workers)
  • - Locals Foreign workers

18
contract FOR service (not an employment
contract) (Kontrak untuk Perkhidmatan)
  • engaged as an independent contractor
  • (such as a self-employed person or vendor) .
  • engaged for a fee to carry out an assignment,
    duty or a project for the company.
  • there is no employer- employee relationship,
    therefore,
  • NOT covered by the Employment Act

19
TERMS CONDITIONS of work for CONTRACT workers
  • Hours of Work 1 Shift 12Hours
  • Wages basic RM 400 RM 450
  • Overtime fixed amount, does not follow rates for
    normal days, rest days public holidays OR none.
  • Annual leave, Public holidays pay, Sick leave,
    Maternity leave - Not mandatory.
  • No payment for legally mandated breaks.
  • Pay cut for absent or late for work or on sick
    leave or on annual leave.
  • Toilet breaks monitored 2x for 12 hour shift
  • Accommodation Transport provided FoC.

20
Types of contract FOR service (Kontrak untuk
Perkhidmatan)
  • Fixed Term Contract -
  • (temporary or contract workers)
  • workers hired by Outsourced Company to work in
    the principle company. 
  • - Locals Foreign workers

21
  • There is no single conclusive test to
    distinguish a contract of employment from a
    contract for services.  Some of the factors to be
    considered in identifying a contract of
    employment include i) Control
  • Who decides on the recruitment and dismissal of
    employees?
  • Who pays for the employees' wages and in what
    ways?
  • Who determines the production process, timing
    and method of production?
  • Who is responsible for the provision of work?
  • ii) Ownership of Factors of Production
  • Who provides the tools and equipment?
  • Who provides the working place and materials?
  • iii) Economic Considerations
  • Does he carry on business on his own account or
    carry on the business for the employer?
  • Does he involve in any prospect of profit or is
    he liable to any risk of loss?
  • How are his earnings calculated and profits
    derived?

22
  • Essential Clauses of Contract of Service
  • Commencement of employment
  • Appointment job title and job scope
  • Hours of work
  • Probation period, if any
  • Remuneration
  • Employee's benefits (e.g. sick leave, annual
    leave, maternity leave)
  • Termination of contract notice period and
  • Code of conduct (e.g. punctuality, no fighting at
    work).

23
LAWS ON PROTECTION OF RIGHTS OF WORKERS
  • STATUTE
  • Employment Act 1955
  • Industrial Relations Act 1969
  • Trade Unions Act 1959
  • Workmens Compensation Act 1952
  • Occupational Safety and Health Act 1994
  • Social Security Act 1969
  • Immigration Act 1959/63
  •   Contract of Employment
  • The contract of employment stipulates terms
    and conditions on duration, wages, work shift,
    days off, sick leave, medical fees, payment of
    levy, visa, medical and travel.

24
Modus operandi in getting permit for foreign
workers.
  • Companies advertise job vacancies in front of
    their factory gates.
  • Companys own Human Resource officer interviews
    and identify potential candidates.
  • Identified candidates - sent to sign a contract
    with an outsource company, usually without
    receiving a copy.
  • Is the contract a contract for service or
  • contract of service?

25
  • The successful candidate
  • Handed over to company Human
  • Resource officer.
  • Provided with the company badge with a unique
    Number to denote contract workers.
  • One week orientation and work
  • process training.
  • Successful candidates sent to the Assembly line
    supervisor to start work as contract labour.
  • Workers not aware of the type of contract!

26
  • Not wanting to be exploited..
  • Locals QUITin PROTEST!
  • (albeit SILENTLY !)
  • Applying for PERMIT
  • Due to the high attrition of contract labour.
  • company applies to the government agencies
    (MOHR KDN) for permit to bring in foreign
    workers.
  • The reasons often cited
  • local workers are not keen on menial jobs,
  • that they are pampered and like to lepak.
  • TREATEN to relocate operation to third country

27
Sikap Pekerja Tempatan
  • Tidak berminat berkerja lebih masa dan syif
  • Terlalu memilih kerja
  • Minat ganjaran yang tidak setimpal dengan
    produktiviti
  • Tidak bersedia belajar kemahiran baru dan kerja
    pelbagai tugas
  • Sukar menerima sistem kerja baru
  • Mementingkan masa untuk riadah dan keluarga

28
  • Facts not mentioned are
  • that the wages and benefits are intentional made
    unattractive,
  • with unfair and archaic terms and conditions of
    service (Pre-Employment Act era).
  • The silent protest.

29
Breakdown of types of Employment contract in an
American Semiconductor Assembly Plant of
semi-skilled workers and Production Operators in
Dec 2007
Breakdown of types of Employment contract in an
American Semiconductor Assembly Plant of
semi-skilled workers and Production Operators in
Dec 2007
30
Cost Comparison - Local vs Migrant worker/per
month (RM)
31
PURPOSE OF COMPANY
  • to make profit.
  • Corporate headquarters sets target that labour
    cost should not exceed 6 of the manufacturing
    cost.
  • Hiring foreign workers will escalate cost of
    labour by 30.

32
  • Local Management to achieve the target
  • Wages benefits are controlled
  • to subsidise the 30 additional labour cost in
    hiring foreign labour.
  • maintain the 6 labour cost.
  • without affecting the companys bottom line
    profit.

33
Race to the Bottomunabated
  • Leading to current reality..
  • wages benefits of the local workers are
    depressed artificially.
  • type of employment contracts have deteriorated
    progressively
  • replace local permanent contract
  • with foreign contract labour.
  • substitute with local contract labour
  • Standard of living deteriorates while cost of
    living escalates.

34
Company achieves
  • Low wage cost.
  • Disposable labour - hire fire.
  • Flexi-labour Multi-skilling/Multi-tasking.
  • Plug play workers. (minimal training)
  • No union (No negotiation powers)
  • Subservient workforce.
  • Convert workers wages into profits.
  • Huge wages bonus payout- Top Mgmt

Perlumbaan menuju ke dasar .
35
  • High contract labour improves NAV (Net Asset
    Value) of company.
  • by transferring labour cost to overhead /
    operation cost putting Companys stock price
    looking good to shareholders.
  • Creative accounting.

36
QADiscussion
37
Problem solving technique.
  • INVESTIGATE (Past)
  • How did the problem start?
  • Who started the problem?
  • When did the problem start?
  • Why did the problem start?
  • Where did the problem start?
  • --------------------------------------------------
    -----------
  • PLAN OF ACTION (Future)
  • How to overcome the problem?
  • Who overcome the problem?
  • When to overcome the problem?
  • Why should we overcome the problem?
  • Where to begin the change?

38
  • HOW IT ALL STARTED?
  • It always starts small.
  • and grows .. and grows
  • finally accepted as NORMAL

39
PEKERJA ASING (PA)
  • LATAR BELAKANG
  • 1992 - Kerajaan meluluskan PA daripada
  • ASEAN, Bangladesh, India dan Sri
    Lanka
  • untuk sektor pembinaan dan
    perladangan.
  • 2000 - Diperluaskan kepada sektor perkilangan
  • dan perkhidmatan (hotel dan
    restoran).
  • 2002 - Meliputi semua sector

Sumber Laporan Pesidangan Meja Bulat Mengenai
Penggajian PA Di Msia - 5-Apr 2007 ISMK - KSM
40
OUTSOURCING(MEMBEKAL MENGURUS)
  • 2005
  • Mesyuarat Jawatankuasa Kabinet mengenai Pekerja
    Asing (JKK-PA) ke-33 Bil. 2/2005 pada 5 Julai
    2005 telah BERSETUJU untuk menggaji PA melalui
    konsep OUTSOURCING.

Sumber Laporan Pesidangan Meja Bulat Mengenai
Penggajian PA Di Msia - 5-Apr 2007 ISMK - KSM
41
  • Outsourcing concept
  • Outsourcing is a concept where the management and
    supply services are undertaken by companies
    selected by the government. The government shall
    select and supervise these companies who are
    reliable to be responsible to recruit, supervise
    and manage foreign workers and present the
    workers to customers who need them under the
    outsourcing concept.
  • Aim
  • The implementation of outsourcing aims to assist
    to overcome the problems of shortage of workers
    and small companies who do not have the resources
    to manage foreign workers full time will save
    cost. It will also help companies/management who
    needs large workforce from time to time
    especially to fulfill additional increase in
    contractual obligations, for peak seasonal
    collection of harvest and so on.
  • Management
  • The management of foreign workers shall be
    managed in an orderly and systematic manner.
    Accommodation, transportation, payment of wages
    of RM400, medical examination including insurance
    coverage shall be under the outsourcing company.

Sumber Laporan Pesidangan Meja Bulat Mengenai
Penggajian PA Di Msia - 5-Apr 2007 ISMK - KSM
42
  • 2006 Terdapat jumlah 1,800,000 PA
  • Negara sumber utama
  • Indonesia 1,174,000 (63)
  • Nepal 214,000 (11)
  • India 138,000 ( 7)
  • Myanmar 109,000 ( 6)
  • Vietnam 106,000 ( 6)
  • Bangladesh 63,000 ( 3)
  • Lain-lain 64,000 ( 4)

43
  • Pembahagian PA mengikut sektor
  • Pembuatan - 646,000 (35)
  • Perladangan - 354,000 (19)
  • Pembantu Rumah - 311,000 (17)
  • Pembinaan - 268,000 (14)
  • Perkhidmatan - 167,000 ( 9)
  • Pertanian - 123,000 ( 7)
  • Jumlah PA 1,800,000 (100)

44
IMPAK Pekeja Asing
  • Dari Segi Ekonomi
  • Kesan Positif
  • Menyumbang RM 17b (5.1) kepada KDNK
  • RM 8.3b (5.2) kepada perbelanjaan persendirian
  • RM 1.2b levi kepada hasil kerajaan (2004)

Sumber Laporan Pesidangan Meja Bulat Mengenai
Penggajian PA Di Msia - 5-Apr 2007 ISMK - KSM
45
  • Kesan Negatif
  • Remit RM 5-7b setahun ke negara asal
  • Kos perkhidmatan kesihatan RM117j
  • Kemunculan semula penyakit tibi, malaria dan
    untut serta membawa penyakit baru seperti kala
    azar (Leishmaniasis).
  • Mengurangkan tekanan kepada majikan bagi
    memperkenalkan automasi dan mekanisasi
  • Mengurangkan tekanan ke atas kenaikan gaji

Sumber Laporan Pesidangan Meja Bulat Mengenai
Penggajian PA Di Msia - 5-Apr 2007 ISMK - KSM
46
  • Dari Segi Sosial
  • Kesatuan sekerja terancam
  • Mengekang kadar upah dan jejas peningkatan taraf
    hidup rakyat
  • Menjejaskan kerukunan sosial

Sumber Laporan Pesidangan Meja Bulat Mengenai
Penggajian PA Di Msia - 5-Apr 2007 ISMK - KSM
47
  • Keselamatan Negara
  • Peningkatan kes jenayah dari 1333 (1992) kepada
    3113 (2002) 133
  • Kos menjaga PA di penjara dan pusat tahanan
  • Kos menghantar pulang PA

Sumber Laporan Pesidangan Meja Bulat Mengenai
Penggajian PA Di Msia - 5-Apr 2007 ISMK - KSM
48
Demographics (Dept. of Statistics, 2006)
  • POPULATION 26.63m
  • - Women 13.07m
  • - Men 13.56m
  • EMPLOYMENT 10.9m
  • - Private sector 5.2m
  • - Public sector 1.1m
  • - Informal sector 4.6m
  • Labour Participation rate
  • - Women 46
    4.0m
  • - Men 86
    6.9m
  • UNEMPLOYMENT 3.5

49
  • Percentage of Foreign Workers against Private
    sector employees
  • 1.8m/5.2m 34.6

Sumber Laporan Pesidangan Meja Bulat Mengenai
Penggajian PA Di Msia - 5-Apr 2007 ISMK - KSM
50
  • NOW it grows to take over employment from
    locals!

51
Malaysian Trades Union Congress LABOUR BULLETIN
July 2008
  • New Straits Time - July 20, 2008
  • interview with Datuk Ishak Mohamed,
  • Enforcement Director Immigration Department
  • Q Should foreign labour outsourcing be banned?
  • A Outsourcing is the best solution for the
    government
  • to manage foreign workers.
  • Q Why?
  • A There are two scenarios
  • One is that as companies get bigger, they will
    need more manpower and with outsourcing they can
    get workers in a more organized way.
  • Two, outsourcing is good as it will attract
    foreign direct investment. Investors will not
    want unions to be formed in their establishments.
  • Through outsourcing, it would be difficult for
    unions to be formed as outsourcing company, and
    not the factory, would be the employer.

52
  • Monday, September 21, 2009, 02.03 PM
  • Labour director-general Datuk Ismail Abdul Rahim
  • said yesterday.
  • We have introduced a quota system, where for
  • the manufacturing sector dealing in exports it is
    two foreigners to one local and
  • one local to one foreigner for all other
    sectors," he said.

53
Cabinet Committee on Foreign Workers and Illegal
Workers.
  • Deputy PM Tan Sri Muhyiddin Yassin.
  • The Laboratory, had been directed to put
    outsourcing companies under the microscope to
    ensure that they stick to their role as providers
    of workers and NOT as EMPLOYERS.
  • 277 registered outsourcing companies.
  • Laboratory 8 ministries and 15 agencies.
  • The Star Tue 23-Feb 2010

54
Malaysian Labour Markets
  • Labour Market
  • Regulated by Employment laws.
  • Employer to submit returns (S62 EA) statistics
  • Do not include outsource / contract workers
  • Transparent.
  • Labour Black Market
  • Not sanctioned by law.
  • Statistics not available.
  • Involves outsource / contract workers.
  • Existing parallel to Labour Market
  • Underground illegal?

State of our Nation
55
  • Statement by
  • THE HONOURABLE DATUK DR.S.SUBRAMANIAM
  • MINISTER OF HUMAN RESOURCES, MALAYSIA
  • AT THE 98TH SESSION OF
  • THE INTERNATIONAL LABOUR CONFERENCE GENEVA.
  • THURSDAY, 11 JUNE 2009.
  • ------------------------------------------
    ------------------------------------
  • It is imperative that we take this crisis
    (Global Economic Crisis) as an opportunity to
    reaffirm our commitment to the principles of
    Decent Work and through such commitment the
    dignity and the rights of workers, as enshrined
    in the principles of Decent Work should continue
    to form the basis of the national agenda for our
    respective governments.In Malaysia, we have
    instituted high ranking tripartite monitoring
    mechanisms very much early in the crisis to
    ensure that the economic consequences of this
    crisis does not step on the rights of our workers
    as prescribed in the Constitution and in the laws
    of the country.

56
Principles of Decent Work
  • Decent work is captured in four strategic
    objectives
  • fundamental principles and rights at work and
    international labour standards
  • employment and income opportunities
  • social protection and social security and
  • social dialogue and tripartism.
  • Decent work is central to efforts to reduce
    poverty, and is a means for achieving equitable,
    inclusive and sustainable development.

57
Principles of Decent Work
  • Decent work sums up the aspirations of people in
    their working lives. It involves
  • opportunities for work that is productive and
    delivers a fair income,
  • security in the workplace and social protection
    for families,
  • better prospects for personal development and
    social integration,
  • freedom for people to express their concerns,
    organize and participate in the decisions that
    affect their lives and
  • equality of opportunity and treatment for all
    women and men.

58
CONTRACT LABOUR SYSTEM is AGAINST Decent work
agenda.
  • DOES NOT provide opportunities for work that is
    productive.
  • DOES NOT deliver a fair income.
  • NO security in the workplace and social
    protection for families.
  • NO prospects for personal development and social
    integration.

59
Employment Act in 1955
  • With the introduction of the EA, the then British
    Administration effectively abolished the
    indenture labour, bonded labour and the
    kanggani system in Malaya, as it was known
    then.
  • The totality of the Employment Act 1955
    established two very important principles of law.
  • They are
  • Security of tenure ensuring permanence of job
    and
  • Proprietary right to the job where termination
    of worker, shall be with just cause and excuse
    by due process.
  • These principles are trite law and are considered
    sacrosanct.
  • MUST be protected at all cost!

60
Selamat berjuang
Bruno Periera
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