1.1 Eight years ago MTUC submitted its first memorandum listing a series of objections against Government’s decision to recruit 100s of thousands of foreign workers. Although initially, foreign workers were brought in to work in the extremely poorly paid plantation sector, highly insecure and unsafe constructions work and to slave as domestic servants, in 1994, Government gave in to pressure from employers in the manufacturing sector, coffee shops, restaurants, petrol pumps and others.

1.2 In its 1994 memorandum, MTUC pointed out the possible misuse by unscrupulous employers and greedy and unethical employment agents which would lead to cheating and exploitation. MTUC cautioned that “ultimately Malaysian Government will have to carry the burden and face severe criticism and backlash.

1.3 Eight years have passed since then and the events that have taken place has proven our fear: In fact far more worse than expected.

2. Issues And Problems

2.1 Government refusal to accept MTUC’s proposal to eliminate all employment agents and carry out all recruitment on a Government to Government basis created opportunities to promote cheating, corruption, forgeries and exploitation.
2.2 We believe not all “illegal or undocumented foreign workers” were aware that they were breaching our laws. Many were handed forged documents or papers they believed were valid for which these poor workers had to pay considerable sums of money.
Duped into buying ‘protection’ letter

Foreigners in several States have been duped into buying documents from an employment agency in Taman Bukit Emas, Jalan Tampin, which purportedly provide “total protection” from action by the Immigration Department and other enforcement agencies.

The agency, with a wide network in Johor, the Klang Valley, Malacca and Negeri Sembilan, allegedly issued documents signed by former Deputy Home Minister Datuk Abdul Kadir Sheikh Fadzir (now Culture, Arts and Tourism Minister), giving protection to immigrants.

State Immigration Department sources said the agency’s operations came to light a month ago when its officers received calls from foreigners who wanted to know the authenticity of the documents and the protection they accorded to holders.

Initial investigations showed the documents were sold for between RM1,000 and RM2,000 each.

The department has established that the agency, run by a 64 year old man, had approval to bring in foreigners to work in the country.

A letter signed by the man, the agency’s managing director, stated that no action by enforcement authorities could be taken against the holder of the letter. The duration of the “immunity” period was not started.

The sources said the man had a case pending against him in the magistrate’s court for allegedly distributing document in 2000 that “legalised” illegal immigrants.

Investigating officers estimate that the agency could have raked in more than RM1 million from the sale of the documents, mainly targeted at Indonesians.

(New Starits Times 6 August 2002)
2.3 Apparently the man has been a regular cheat and is facing charges. Why was his licence as recruiting agent not withdrawn or suspended.

2.4 Employers Are The Major Culprits

By their own admission employers, especially those in construction sector have openly admitted, that despite repeated warnings, they employed thousands of illegals.

Labour vacuum in construction industry

Master Builders Association of Malaysia Vice President Patrick Wong asked the government consider extending the amnesty period until such time when a sufficient number of legal foreign workers is in place to avoid a slowdown or work stoppage.
Wong said the association also suggests that the government suspend flushing out illegal workers from construction sites until the proposed extended amnesty period expires.

(The Sun 27 July 2002)

Master Builders Association Malaysia (MBAM) expects to see some work disruption at construction sites this month as contractors try to replace illegal workers sent home under new Immigration laws that take effect today.

(New Straits Times 1 August 2002)
2.5 Government is fully aware of misuse and blatant abuse of the facilities granted to employers.

Some employers ‘selling’ their foreign workers after obtaining work permits

Certain employers, after getting work permits, are believed to be “selling” some of their foreign workers to other employers, the Human Resources Ministry said today.

Deputy Minister Dr Abdul Latiff Ahmad said the buying and selling process was believed to be handled by an organised syndicate.
(New Straits Times 19 August 2002)

3. Burden On Our Resources

3.1 The problem of illegal immigrants has been with us for more than a decade and has gone out of control through our lackadaisical enforcement and absence of a clear policy. Greedy recruiting agents and profit motivated employers seeking cheap labour has mainly contributed to the current chaotic situation.

3.2 The presence of 100s of thousands of illegal workers has unnecessarily stretched the resources of the police in enforcing the law and in addition huge public expenditure has gone into establishing and maintaining detention centres to keep them while awaiting deportation.

3.3 To effectively enforce the law the Immigration Department has to deal with thousands of employers and monitor hundreds of thousands of workers spread out all over the country. This requires additional manpower at very high cost.

3.4 Government has repeatedly lamented that dependency on foreign workers is bad for our economy because each year they take out hundreds of millions of ringgit. Yet the next statement we read clearly expose their pretence.

4. Lack Of Clear Policy

4.1 Absence of clear policy has encouraged unscrupulous employers to resort to suttle threats, arm twisting and sometimes actions which tantamount to black mailing.

4.2 Following the riot by Indonesian workers in Nilai, in February 2002, Government announced that in the future Indonesians will not be favoured.

The construction and manufacturing sectors, which were stopped from employing fresh Indonesian workers from February, can now recruit them with immediate effect.

The Cabinet Committee on Foreign Workers decided on this after considering appeals from representatives of the two sectors.

The Committee had in February announced that the recruitment of Indonesian workers would no longer be allowed for the construction and manufacturing sectors, restricting them to the plantation and domestic help fields.

(The Star 15 August 2002)

4.3 MTUC is disturbed by the confusing statement by the Human Resources Minister which has reversed the February 2002 declaration that Indons will not be allowed to work in the manufacturing sector but Government will allow up to 50% of the workforce to be foreigners.

Manufacturing companies are now allowed to recruit Indonesians to ease the shortage of workers following the return of thousands of immigrants under the amnesty programme which ended on July 31.

A ratio of one local to one Indonesian worker will also be imposed.

“The number (Indonesian workers) will not be as large as in the past. Enforcement will be tightened to ensure the problems we experienced before will not recur”.

(New Straits Times 16 August 2002)

4.4 Recruitment on a Government to Government basis

In February 2002, YAB Deputy Prime Minister announced that in future all recruitment of foreign workers will be on a Government to Government basis. Is this ruling still in force or will fade away even before its implementation?

The Cabinet has decided the recruitment of foreign workers would be carried out on a Government-to-Government basis immediately.

Elaborating on the matter, Human Resources Minister Datuk Dr Fong Chan Onn said the move could prevent problems such as foreign workers being cheated.
Fong said the countries from which workers could be recruited – the Philippines, Cambodia, Laos, India, Myanmar, Nepal, Thailand, Vietnam, Kazakhstan, Turkmenistan and Uzbekistan – would come under this new condition.

Indonesians are now only allowed to be employed in the plantation sector and as domestic maids.

(New Straits Times 7 February 2002)

4.5 Rely Less On Foreign Workers

The government will be more stringent on the hiring of foreign workers to reduce their numbers in the country.

Deputy Prime Minister Datuk Seri Abdullah Badawi said the Cabinet Committee on Foreign Workers, at its meeting today, agreed on steps be taken to lessen the nation’s dependence on foreign labour, including encouraging employers to switch to automation.
(New Straits Times 5 February 2002)
Has the Government got any intention to give effect to this policy?

5. Discriminatory Punishment

5.1 According to an estimate by Affin –UOB Securities 322,180 illegals from 4 major sectors were deported by end of July. The impact will be felt most in the construction sector, where eight out of every 10 foreign labour employed were illegals.

Deporation of Illegal Foreign Workers

Impact on Economic Output

Estimates by Affin – UOB Securities
(New Straits Times 26 August 2002)

5.2 We respect the new laws which allows caning but why only the poor workers who ventured out to seek gainful employment in order to survive are punished?
Why such punishment is not meted out to the employers and recruiting agents who are real perpetrators? By offering jobs to illegals these employers have knowingly sabotaged governments efforts to enforce orderly recruitment and repatriation at the end of their contract.

5.3 It is the unacceptable conduct of these employers which has created enmity and hatred for our nation amongst our neighbours.

Datuk Seri Dr Mahathir Mohamad said today the Government has no intention of taking action against employers who had employed illegal immigrants in the past.
The Prime Minister said it was too late to act against the unscupulous employers now as their illegal foreign workers have returned to their respective countries.

We should have taken action when they (illegal immigrants) were still here. We cannot take action now (because) the people have already gone,” he said.

He said this in response to questions as to why the Government was not acting against employers who employed illegal immigrants before the Government’s blanket amnesty and subsequent deportation of illegal immigrants.

(New Straits Times 11 September 2002)

6 Current Labour Market Situation

MTUC carried out a random survey amongst 10 affiliated unions to ascertain the current labour market situation. Reports received as of 23 August, 2002.

a) Automobile Industry

Twenty factory represented by the NUTEAIW had no foreign workers at all. Starting wages in these factories remain at RM550 and above. However large companies like Cycle & Carriage, Ford Swedish Motor Assemblers, Suzuki and Yamaha employ about 700 foreign workers. Car Seat (Malaysia) Sdn. Bhd under Japan based Ikeda Group in Shah Alam have 200 foreign workers employed through contractors. It is reliably learnt that less than 50% of the money paid by Principal employer are paid to contract workers. Often these contract workers are not paid regularly.

b) Metal Industry

Union reported that amongst the 110 factories represented, almost 80 factories had no foreign workers. Even those who had foreign workers have gradually reduced after 1998. LB Aluminium, Matsushita Foundry and Syarikat Metal Industry still have a significant number of foreign workers. Japan based Okumura Metal in Bangi is among the worst, employing more than 50% foreign workers in the factory.

c) Port Kelang

All the stevedoring workers (about 1200) are locals. However in the West Port the situation seems to be different. Soon after the workers formed a union Zetavest dismissed 30 local workers and recruited 50 foreign workers, who were told that they are not permitted to join any union.

Lashing – Previously all locals but now all foreigners: only one contractor employ all locals.

d) Casio Malaysia

Almost 20% of the 2000 employees are foreign workers, who are paid a meagre sum of RM400 per month. Recently the company eliminated about 100 locals through voluntary seperation scheme.

e) Construction Industry

The union pointed out that until 10 years ago all buildings including multistory buildings, highways, even the East-West Highway was entirely built by locals. It is obvious that the construction industry is taking unfair advantage of the understanding shown by the Government. The fact that more than 265,000 of the 322,000 illegal foreign workers were from the construction sector shows that they prefer illegals.

§ The following examples would show that construction employers’ preference for illegal foreigners is not cost factor but extreme greed to keep lions share of the revenue earned.

§ A major construction company pays RM80 per day for each worker utilised by sub contractor where as the contractor, pay the worker only RM33 per day. More than 50% of the payment meant for the worker is pocketed by the sub contractor.

§ Highway concessionaire PLUS appoints PROPEL for road maintenance and they in turn appoint a number of sub contractors who actually employ workers to carry out maintenance work. The system promotes middlemen who want to make a profit without doing the actual work – This leaves little money to be paid to the workers who physically carry out the job.

§ Road Maintenance Contractor Sungei Long Industries employ 140 workers – all locals. With a minimum starting wage of RM600 per month they are able to employ and retain locals.

§ MTUC has received numerous complaints that contractors in the construction industry often do not pay their illegal foreign workers regularly and after owing backwages for 4 or 5 months, they tip of the police who promptly arrest them. Such workers are deprived of their hard earned wages.

f) Timber Industry

In the last 12 months 600 workers, all locals, lost their job due to closure of 3 factories and another factory would be closed within next few months and retrench 100 more workers.

g) Petroleum & Chemical Industry 3000 jobs lost due to closure of 4 companies. 3 companies are moving out which will lead to retrenchment of 700 workers.

h) Textile Industry 500 jobs lost in Selangor

i) Clubs

Unions representing Club employees reported that 16 Clubs employ a significant number of foreign workers. Union insist that they can find locals without great difficulty. One Club in Petaling Jaya sought the assistance of the union and within a week they submitted a list of locals who were all accepted by the Club.

j) We agree and fully support YB Human Resource Minister’s statement that there is no labour shortage in the country.

“Fong : No labour shortage

The manufacturing sector is not facing a severe manpower shortage as claimed by some companies.

Human Resource Minister Datuk Dr Fong Chan Onn said the ministry was satisfied with the situation although there were companies which continued to rely on foreigners.

He said although they were permitted to employ foreigners, they should only do so if their attempts to employ locals failed.

From what we have gathered, there is no severe manpower shortage. As such, we hope employers will give priority to locals.

“Where the ministry is concerned, we will continue to encourage and help employers, especially those in the manufacturing sector, to secure the services of locals,’ he added.
(New Straits Times 10 September 2002)

7. MTUC’S Proposal

At the 35th MTUC Triennial Delegates Conference held on 5 – 6 March 2002 this matter was debated at length and we respectfully submit the following proposals:

7.1 Malaysian workers must be given priority.

7.2 Dependence on foreign labour should be phased out and appropriate strategies must be drawn up and implemented with commitment.

7.3 Unlike the current practice Government must ensure that foreign labour is recruited as a last resort and must always be economically justifiable. We strongly object Governments’ proposal to allow one-for-one, which would mean 50% of work force will be foreign workers.

7.4 Importing cheap labour is often the main cause of distortion between the relative price of capital and labour. The demand for foreign workers is not due to genuine shortage but due to the desire of employers to pay lower wages.

7.5 In the last decade Government has repeatedly suggested that competitiveness should rightly be derived from technology and capital intensity. Unless government ban recruitment of foreign workers, this call will not be heeded. Continued issuance of work permits leads us to conclude that either government is blind to the plight of local workers or bending backwards to please employers.

7.6 A minimum wage (living wage) should be established without delay to attract the tens of thousands of Malaysians, especially women, who are distracted by low wages. Workers have a right to expect Government to ensure a decent wage and working conditions.

7.7 Widespread contracting system in the construction sector has eliminated security of tenure and casualised employment status. This has understandably compelled locals to shun such insecure jobs. There is complete lack of coordination which leave thousands without work in some work sites and labour shortage elsewhere.

7.8 Government must promote efficient utilisation of manpower in the construction sector by registering all construction workers. This must be carried out by the manpower Department, so that government can efficiently monitor and coordinate labour availability and needs.

7.9 Government should eliminate recruiting agents and henceforth all recruitment of foreign workers must be on a government to government basis.

7.10 In order to ensure fair treatment, government should stipulate wages and working conditions for foreign workers as well.

7.11 Foreign workers who are unfairly terminated prior to expiry of their contract, must be allowed to follow the due process of law to seek justice and pending a settlement such workers should be permitted to seek employment through the labour department. The current practice is cruel and unfair to workers victimised by unscrupulous employers.

In the interest of the nation and Malaysian working families, we urge YB Menteri Sumber Manusia to give due consideration to our proposal and take urgent measures to effectively address and solve the problem.