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 BY

NG WEI KHIANG

SELVA PONIAH

 JULY 30, 2003

FOR

OSH DEPARTMENT

 MALAYSIAN TRADES UNION CONGRESS

Contents 

 

Page

 

 

1.0 Introduction

3

 

 

2.0 Background of SMEs in Malaysia

7

 

 

3.0 OSH In SMEs

7

 

 

4.0 OSH Initiative for SMEs

8

4.1 Legislation and Policy

8

4.2 Training & Promotional Activities

8

4.3 OSH Studies in SMEs

9

4.4 The DOSH “Stick & Carrot” Approach

10

4.5 The Partnership Program

10

 

 

5.0 Conclusion  & Recommendations

11

 

 

6.0 References

12

 

 

 1.0 Introduction

Service sector is generally defined as the provision or system of supplying a public need, e.g. transportation, supply of water, gas, electricity, communication etc.  There are 11 industrial types based on the SOCSO classification. Among them, seven can be classified as service sectors: (i) Electricity, gas, water & sanitary service, (ii) Construction, (iii) Trading, (iv) Transportation, (v) Financial Institution and Insurance, (vi) Services, and (vii) Public Services.  

In terms of economy contribution, the service sector has contributed RM 140,224 million which is about 60% of the GDP in 2003. Among the service sector, the significant GDP contributors are (i) Wholesale and retail trade, hotels and restaurants, (ii) Finance, insurance, real estate and business services, and (iii) Transport, storage and communications. 

Table 1. GROSS DOMESTIC PRODUCT BY INDUSTRIAL ORIGIN (RM Million) 

 

1998

1999

2000

2001

2002

2003*

Agriculture, forestry and fishing

17,415

17,596

17,943

18,269

18,478

19,114

Mining and quarrying

14,425

15,344

15,641

15,892

16,217

16,629

Manufacturing

50,899

56,841

67,717

63,536

66,805

72,470

Construction

7,333

6,926

6,996

7,159

7,434

7,772

Electricity, gas and water

6,329

7,078

8,226

8,792

9,429

10,140

Transport, storage and communications

14,873

15,354

17,036

18,317

19,301

20,467

Wholesale and retail trade, hotels and restaurants

28,565

29,383

30,806

31,742

32,937

34,584

Finance, insurance, real estate and business services

23,346

24,976

26,064

28,548

30,902

33,267

Government services

13,278

14,055

14,395

15,058

15,712

16,426

Other services

15,061

15,447

15,845

16,306

16,835

17,568

Less:  Imputed bank service charges

13,734

14,876

15,873

17,902

20,024

22,138

Add:  Import duties

4,430

5,319

4,742

4,762

5,373

6,176

GDP at market prices

182,221

193,422

209,538

210,480

219,400

232,477

 * Estimated by the Ministry of Finance

Source:  Economic Report 2002/2003 - Ministry of Finance, Malaysia. 

 The service sector that has the highest number of employees is Services (including public service), 24.5%, followed by Wholesale and retail trade, hotels and restaurants, 16.7% and Transport, storage and communications, 6.4%.

 Table 2. Registered Employers and Employees by Economic Sectors in 2001. 

 

Registered Employers

Registered Employee

 

Frequency

%

Frequency

%

Agriculture, forestry and fishing

16,459

3.7

261,924

5.0

Mining and quarrying

2,788

0.6

54955

1.0

Manufacturing

63,043

14.2

1,545,773

29.2

Electricity, gas and water

1,671

0.4

33,993

0.6

Construction

42,496

9.6

321,918

6.1

Wholesale and retail trade, hotels and restaurants

108,097

24.4

884,165

16.7

Transport, storage and communications

24,481

5.5

335,996

6.4

Finance, insurance, real estate and business services

10,403

2.3

188,801

3.6

Services (including public services)

146,768

33.1

1,297,949

24.5

Other services

404

0.1

7,374

0.1

Activities not adequately defined

27,294

6.1

354,725

6.8

 

 

 

 

 

Total

443,904

100

5,287,573

100

Source: SOCSO, 2001.

Given that service sector covers a wide range of services, the OSH issues and challenges are diverse. The majority of this sector are small and medium sized enterprises (SMEs). Local researchers have carried out a number of OSH study in this sector and the government initiative has also been targeting on the SMEs. This is due to the findings that SMEs contributed about 80% of the accidents at the workplace and was the main cause of the plateau in the SOCSO accident statistic.

The specific OSH issues in the Service sector are highlighted in Table 3. At one glance, site hazards are related to the Construction and Electricity, Gas and Water Sectors such as heavy machinery handling, falling from height, hot work, confined spaces and many others which required skilled and competency in handling the hazards. Finance, Insurance, Real Estate and business services; Wholesale and Retail Trade, Hotels and Restaurants; and Transport, Storage and Communications are more “indoor” thus the hazards are related to office such as ergonomic, manual handling and fire with commuting hazard as a main concern for the Transport sector.

Table 3. Common OSH Issues in the Service Sector.

Type of Service Sector

OSH Issues

Electricity, gas and water

General site safety, such as falling from height, hot work, material handling.

 

Construction

General site safety such as falling from height, hot work, material handling and lifting, and heavy machinery safety.

Wholesale and retail trade, hotels and restaurants

Generally, commuting safety. For hotel and restaurant, OSH issues are related to kitchen safety.

Transport, storage and communications

Generally commuting safety. Others are material handling and ergonomic.

Finance, insurance, real estate and business services

Generally, commuting and office safety such as sitting posture, work stress and fire hazard.

Services (including public services)

Generally, office safety such as sitting posture, work stress and fire hazard.

 

 

 From Table 4, Wholesale and Retail Trade, Hotels and Restaurants (commerce) reported 13,774 cases of workplace accident which is the highest within the Service Sector in 2001, followed by Civil Services, 7487 cases and Services (real estate, professional services, equipment rental and leasing), 5950 cases.

Although the Wholesale and Retail Trade, Hotels and Restaurants (commerce) has the highest reported accidents in 2001, however, in terms of case fatality, Electricity, gas, water & sanitary service has the highest case fatality (26.1%) followed by Transportation, 20.8% and Construction, 19.8%. Comparing to industrial average of 11.1% and other sectors such as manufacturing and agricultural on case fatality, Service sector is much more higher.

Table 4. Distribution of Accidents and Fatality Frequency by Sectors

 

Industry

 

 

Indicator

 

1977

 

1980

 

1985

 

1990

 

2000

 

2001

 

 

 

 

 

 

 

 

Agricultural, forestry & fishing

Accidents

Fatality

Case fatality

 

374

7

18.7

5,550

5

0.9

1961

38

1.9

3897

134

3.4

11893

115

9.6

12424

75

6.0

Mining & quarrying

Accidents

Fatality

Case fatality

 

924

11

11.9

1640

18

10.9

1563

21

13.4

2644

12

4.5

626

11

17.5

573

7

12.2

Manufacturing & processing

Accidents

Fatality

Case fatality

 

28,068

30

1.0

31,801

36

1.1

28,592

54

1.8

54,925

86

1.5

41,331

282

6.8

35,642

243

6.8

Electricity, gas, water & sanitary service

Accidents

Fatality

Case fatality

 

179

1

5.5

177

3

16.9

106

6

56.6

860

2

2.3

537

8

14.8

499

13

26.1

Construction

Accidents

Fatality

Case fatality

 

6807

44

6.4

3323

16

4.8

4069

28

6.8

3123

40

12.8

4873

159

32.6

4593

89

19.4

Commerce

Accidents

Fatality

Case fatality

 

5312

15

2.8

4291

12

2.7

2843

21

7.3

13,893

38

2.7

15,452

151

9.7

13774

192

13.9

Transportation

Accidents

Fatality

Case fatality

 

2231

25

11.2

931

24

25.7

 

1174

32

27.2

2800

27

9.6

4778

98

20.5

4382

91

20.8

Financial & Insurance

Accidents

Fatality

Case fatality

 

4017

32

7.9

3627

29

7.9

3763

38

10.0

194

3

15.4

687

11

16.0

602

6

10.0

Services

Accidents

Fatality

Case fatality

 

-

-

-

-

-

-

-

-

-

569

5

8.7

6581

72

10.9

5950

106

17.8

Civil Service

Accidents

Fatality

Case fatality

 

-

-

-

-

-

-

-

-

-

3126

40

12.7

8248

97

11.7

7487

136

18.1

TOTAL

Accidents

Fatality

Case fatality

47,912

165

3.4

51,340

143

2.7

61,724

238

3.8

121,104

387

3.1

95,006

1004

10.5

85926

958

11.1

 

 

 

 

 

 

 

 

Source: SOCSO, 2001.

2.0 Background of SMEs in Malaysia

In Malaysia, different government agencies have different definition for small and medium sized enterprises (SMEs). For example, Malaysia Industrial Development Agency (MIDA) defined SMEs as companies with paid up capital of RM 2.5 million and full-time employees are less than 75. The Treasury Department defines it as companies with the shareholder’s fund not exceeding RM 10 million. However, lately the definition has been harmonized and used by different organizations. It is defined as enterprises with less than 150 employees and annual sales turnover not exceeding RM 25 million (1).

A number of reports showed that SMEs are a crucial cluster for the country economic well-being. In 2001, they comprise nearly 90% of private business establishments, employing nearly 30% of the Malaysia employees in the private sector (Total number of workforce in private sector is about 9.6 million) and contributing approximately 19% of the Malaysia’s manufacturing output (2).

3.0 OSH in SMEs

Being important in its role as an economy dynamic, however, this sector continuously faces many challenges. They are much dependent on large companies or multi national companies (MNCs) for businesses, they lack of financial resources, sound management (e.g. family-run businesses or “one-man show”) and difficulties in penetrating the overseas market (2,3). In terms of safety and health, they are prone to workplace accidents and illnesses. In Malaysia, anecdotal reports on small and medium sized workplaces showed that they are prone to accidents and illnesses (3,4,5,6).

From the statistics published by the Social Security Organization (SOCSO), there are 165 accidents reported per 10,000 workers for all sizes of enterprises in 2001 compared to 314 accidents reported per 10,000 workers in 1994 (7). The number of accident has reached its plateau since 1997. This plateau could be due to the program approach has reached its ceiling and new approach, i.e. the system approach needs to be implemented. Besides, the SMEs are not taking enough steps to prevent accident, as an official calculation showed that 80% of the reported cases were contributed by SMEs. In terms of occupational diseases, 11591 of invalidity and survivors cases were reported in 2001, compared to 6035 of invalidity and survivors’ cases in 1997. However, occupational diseases are grossly underreported in which the proportion of SMES is unknown.

The increasing accident and illness figures had drawn the attention of Government and the industry itself. Besides causing pain, suffering, and loss of productivity, occupational accidents and illnesses also exact a heavy cost to Malaysian industries, for example in 2001, it caused the SOCSO to pay nearly RM 600 million of compensation which is about 0.3% Malaysia GDP (Malaysia GDP in 2001 is about RM 210 billion). 

4.0 OSH Initiatives for SMEs

Over the years, many of the safety and health initiatives have been focusing on 10% of the total manufacturing industries which are the large enterprises such as manufacturing, mining and agricultural. It means that the 90% which made up of small and medium sized enterprises have been underserved by many safety and health initiatives. Given the small number of employees, SMEs do not need to meet certain requirements of the Occupational Safety and Health Act 1994, such as safety and health officer and safety and health committee. In view of this, the approach in training and communicating safety and health to them requires special consideration on their issues and constraints (8).

4.1 Legislation and Policies

In Malaysia, the framework to manage OSH was embodied in the OSH Act 1994, and its regulations. A number of Code of Practices and Guidelines have been produced to assist the companies to comply with the laws. Besides the legislative provisions, there are on-going initiatives and programme by different governmental bodies to assist the SMEs. Government policies such as the Second Industrial Master Plan (1996-2005) and the SMIs Priority Action Plan (1999 –2000) have specifically addressed issues faced by SMEs(9).

4.2 Training and Promotional Activities

The Ministry of Human Resource had also approved OSH training and auditing program under the Human Resource Development Fund (HRDF). The Ministry of International Trade and Industries (MITI), through its agency, Small and Medium Sized Development Cooperation (SMIDEC) provides Industrial Technical Assistance Fund (ITAF) to SMEs for financing the purchase of machinery, technical and productivity training and acquiring quality certification.

In 2000, the OSH training and auditing was included as one of the categories approved for the fund. An allocation of RM 600,000 was given to NIOSH Malaysia in 2002 to conduct OSH training and auditing for the small and medium sized enterprises. The approved ten courses under the funding are:

No.

Course Title

 

 

i.

Factories and Machinery Act 1967

Ii.

Occupational Safety and Health Act 1994

Iii.

Occupational Safety and Health Management

iv.

Safety and Health Committee

v.

Understanding and Implementation of OSHA and Its Regulations

vi.

Use and Standard Exposure of Chemicals Hazardous to Health Regulations 2000

vii.

How to formulate safety and health policy

viii.

How to conduct an accident investigation

ix.

Managing emerging health related problems at work

x.

Occupational Fist Aid Course

 

 

NIOSH Malaysia is aware of the increasing OSH needs among the small and medium sized enterprises. This has prompted them to set up the SME unit in 1999. Besides providing training for the SME through the Small and Medium Sized Industries Development Cooperation (SMIDEC) funding, this unit also focuses on promoting OSH among SMEs through road shows and SME trade fair.

Industrial specific training and seminars have also been carried out. For example, UITM has conducted OSH training for the Food and Beverage Industry. The State level Hotel Association also promotes OSH practices among its members including OSH talks and seminars. Some of the service companies have also participated in the Annual MSOSH Award.

4.3 OSH Studies in SMEs

In 2000, the National Council of Occupational Safety and Health (NCOSH) has initiated a pilot study on OSH-MS among the Proton vendors of which the majority are small and medium sized enterprises. The study showed that by using the OSH-MS checklist adopted from ILO OSH 2001, there were significant differences between Proton’s vendors and the benchmarked companies which consisted of gold and silver safety award winners organized by Malaysia Society of Occupational Safety and Health (MSOSH). This study also highlighted that the Proton vendors OSH management are geared towards legislative compliance and lack of management review and continuous improvement, which are obvious in the benchmarked companies.

4.4 The DOSH “Stick & Carrot” Approach

The Department of Occupational Safety and Health (DOSH) has started a Star Rating Scheme for the small and medium sized enterprises. There are all four star categories, namely four stars, three stars, two stars, one star and zero star. Under this scheme, each small and medium sized enterprises will be audited and inspected by using the standard audit checklist. In 2002, a total of 2600 factories was audited and in the subsequent years until 2006, an average of 3464 factories will be audited yearly. Factory which achieved a good star rating, for example four stars, will enjoy several privileges. These include lower frequency of inspection from DOSH, lower insurance premium and faster approval of loans from financial institutions.

4.5 The Partnership Programme

DOSH is also promoting a mentor-mentee system among the multinational companies (MNCs).  Under this program the host company will provide the necessary resources especially on OSH know how to their vendors. Currently, few companies such as Motorola Malaysia had started the program. Effort has been taken to encourage more MNCs to adopt this program as part of their OSH management.

Some OSH conscious companies such as Intel Malaysia have started the program since 1998 with the Contractor Safety Passport System (CSPS). This system is to ensure their contractors / vendors are trained and qualified for the necessary trade of OSH competence before starting their work in Intel. Proton Malaysia also responded to the government initiative to start the vendor training program.

DOSH has carried out a number of collaboration works with ILO aiming to upgrade OSH among the SMEs. In 1997, the ILO WISE program was launched in Malaysia and 82 trainers were trained to conduct the programme (10). This programme has achieved its objectives at its own right. A follow up survey of the ex-WISE participant also revealed that majority of the companies showed some form of OSH management e.g. setting up of safety and health committee, and appointment of safety and health personnel (11).

5.0 Conclusion & Recommendations

Service sector is the major sector besides manufacturing, mining and agricultural. Majority of the subsector are small and medium sized enterprises. The case fatality in this sector as a whole is higher than industrial average especially in Electricity, Gas, Water & Sanitary service, Transportation and Construction.

The various approaches in upgrading this sector are welcomed. The government bodies, DOSH has emphasized their focus on OSH prevention in this sector. The “Carrot and Stick” approach thru enforcement will continue to play its role, and should be balanced by the training and awareness program such as the initiative by SMIDEC, trade unions and associations.

It is important to note that self-regulation within this sector will be the ultimate solution in preventing the rise of accident.

6.0 References

1.      SMIDEC. (1998). Profile of SMEs in APEC Economies. (p23). Malaysia: SMIDEC.

2.      Malaysia. (1999). Small and medium industries development. In Malaysia

International Trade and Industry Report. (pp211-225). Malaysia:MITI.

  3.      Khor GL. (1990). Working populations and health in the third world: problems

and policies. Paper presented at the fourth Takemi symposium on international health, Boston, US.

  4.      Abed Onn. (1999). NIOSH: future directions for the new millennium. Paper  

      presented at the NIOSH 2nd  conference on occupational safety and health,    

      Bangi, Selangor.

  5.      Abu Bakar Che Man. (2000). OSH for SMIs: Some proposals for long term solution-the governments perspective. Paper presented at the NIOSH 3rd conference on occupational safety and health, Bangi, Selangor.

  6.      Johari Basri. (2000). OSH for SMIs: The challenge ahead. Paper presented at the NIOSH 3rd conference on occupational safety and health, Bangi, Selangor.

  7.      SOCSO. (2001). Annual report 2000. Kuala Lumpur:SOCSO.

 8.   Asiah Jaafar. (2000, December). OSH training for small and medium industries (SMIs): effective approaches and how to implement them. (pp4-7). NIOSH Bulletin.

 9.   Federation of Malaysia Manufacturer. (2001).  SMIs priority action plan (1999- 

      2000). http://www.fmm.org.my/smi/paper-action.htm

 10. Rampal KG, Kogi K, Che Man AB, Chaikittiporn C, Ismail NH, Kawakami T,

      Musri M. 1996. Experiences of action-oriented field ergonomics training

      in Malaysia. J. Science of Labour 72 part 1(1): 24-30.

 11. Ng WK, Maimunah Khalid. (2002). Follow-up survey of OSH Performance among companies participated in the WISE project. Paper presented at the NIOSH 5th conference and exhibition on occupational safety and health, Kuala Lumpur.

Webpages

Department of Statistics Malaysia. (April 25, 2003), at http://www.statistics.gov.my

Social Security Organization, (April 25, 2003), at http://www.perkeso.gov.my

Ministry of Finance, (April 26, 2003), at http://www.treasury.gov.my/

Official Malaysian Publication

 

SOCSO. (2002). Annual report 2001. Kuala Lumpur: Affluent Master.

 

International Law Book Service. (1999). Factories & Machinery Act 1967 (Act 139) & Regulations and Rules. Selangor: Percetakan Ihsan.

 

International Law Book Service. (1999). Occupational Safety and Health Act 1994 (Act 514) & Regulations and Rules. Selangor: Percetakan Ihsan.

 

 

Wisma MTUC,10-5, Jalan USJ 9/5T, 47620 Subang Jaya,Selangor.Tel:03-80242953,Fax: 03-80243225,
Email:mtuc@tm.net.my . OSH Contact No: (603) 8023-3954, FAX: (603) 8023-3955, Email: mtucosh@tm.net.my