Employment law for all

I WOULD like to thank Ashgar Ali Ali Mohamed for his letter “Move to promote equal protection for all workers” (The Star, March 30). He is right. The Employment Act 1955 enforced in peninsular Malaysia is an important piece of legislation, but it has now become archaic. This is why it is crucial for the Human Resources Ministry to amend it so that it would protect the rights of all workers.

The Act as it is does not sufficiently protect low wage earners. It also needs to be more competitive as we have to think about how some successful economies of various countries have reduced their number of working hours per day without affecting productivity – some reports have even claimed increased productivity as a result.

Balancing the happiness of employers and employees in this country is no easy feat, which is why I have made it a point to conduct the National Labour Advisory Council (NLAC) meeting every month since January despite only needing to do it twice a year.

The Malaysian Employers Federation (MEF) and Malaysian Trades Union Congress (MTUC) are stakeholders in the NLAC. These two often go head to head on issues during these meetings but generally reach a consensus by the end of each session. The two also know that not upsetting the balance of a healthy and business friendly environment is key to creating more jobs.

Recent headline-centric studies about low salaries in Malaysia fail to take these aspects into consideration. The fact is employers are only provided with a base salary in which to pay their employees, but this does not in any way prevent them from paying more based on their skills and productivity. This can also be done by way of a collective agreement.

There is no lack of high-skilled jobs in the country but there is an unsatisfactory quality of talent being produced due to technical and vocational education and training (TVET) institutions not being given the attention and relevance earlier. There is also a lack of knowledge about the importance of these institutes and how they can produce human capital of the future.

The Pakatan Harapan government has acknowledged this through the 2019 Budget, which has various incentives pertaining to TVET and skills creation. We are turning the situation around.

We should be focused on reducing our dependence on foreign workers and aim to eventually become a high-skilled economy, which will drive wages up.

The National Wages Consultative Council (NWCC) consistently conducts surveys on the level of minimum wage in Malaysia. This study takes into account the various socio-economic aspects, including elements of labour productivity, median wage, Consumer Price Index (CPI), unemployment rate, and poverty line income (PLI).

The implementation of the minimum wage has had a positive impact on compensation of employees to GDP growth, which increased from 31.7% in 2010 to 35.2% in 2017. In fact, under the Eleventh Malaysia Plan (11MP) Mid-Term Review 2016-2020, contribution of workers’ compensation to GDP is expected to increase to 38% by 2020.

The 11MP Mid-Term Review also emphasises the expansion of Productivity-Linked Wage System (PLWS) implementation as an effort at reforming the labour market for salaries and wages. In 2013, 76,023 employers were implementing PLWS and this figure increased to 11.7% in 2018 (84,922 employers).

The Institute of Labor Market Information Analysis (Ilmia) of the Human Resources Ministry has developed the National Wages Index, which is a guideline and benchmark for employers to determine the level of salaries for their employees based on their qualification, skills and productivity. Actually, the National Wage Index has shown an increasing percentage of basic salary (8.2%) for the period of September 2016 and June 2018 (eighth quarter).

Welfare of employees is always on the government’s mind and many steps are being taken and considered for implementation in order to raise the overall standards of workers in this country.

These include the recent proposal by the Human Resources Ministry to extend the application of the Employment Act to cover all workers irrespective of their wages in order to end discrimination among the workforce in Malaysia in line with international labour standards.

M. KULA SEGARAN Minister of Human Resources