Sunday, 02 January 2011
WTH reference to the letters ‘Malaysia has to stay competitive’ (The Star, Dec 27) and ‘A better investment climate’ (The Star, Dec 29), I would like to state the concern of the Malaysian Employers Federation (MEF) with regard to recent developments affecting employers and the business community.
Though the Government has done well to improve the competitiveness of the nation through various initiatives, including the advent of Pemudah, Pemandu, New Economic Model (NEM) and Economic Transformation Programme (ETP), employers and investors are nonetheless concerned by some of the proposed changes.
Some of these concerns include the proposed national minimum wage, the extension of maternity leave from 60 to 90 days, the requirement to provide health insurance for foreign workers, unemployment insurance and the increasing number of public holidays being declared from time to time.
While MEF welcomes the Government’s decision to establish the National Wages Consultative Council, efforts to enact the proposed National Minimum Wages Act 2011 even before the setting up of the National Wages Consultative Council have given employers the jitters.
MEF is of the view that to propel Malaysia into a high income economy, wages should be determined by market forces and the Government should not interfere and dictate in fixing the level of wages in the private sector.
Conversely, higher income without corresponding increase in productivity and performance will be detrimental to Malaysia’s overall competitiveness.
Evidently, the imposition of minimum wage for private security guards has resulted in companies having to pay about 100% more than the current rate for security ser¬vices.
Furthermore, in countries where the national minimum wage has been implemented, there has been no indication of job creation.
Employers are also very concerned with the Government’s decision to require foreign workers to have health insurance with effect from Jan 1, 2011.
Whilst the decision was based on RM18mil uncollected hospitalisation bills of the two million registered foreign workers in the country, the cost of health insurance to foreign workers – at a rate of RM120 per person – is tantamount to a whopping RM240mil per year.
Even though the amount is to be paid by the foreign workers, eventually the cost will be passed on to the employers.
The Government’s inconsistent policy with regard to the requirement to provide health insurance to foreign workers has made the situation more confusing for employers as it was earlier decided that the plantation sector would be excluded.
However, this is no longer the case as foreign workers in the plantation sector are also required to take health insurance and the cost of such insurance is to be borne by the plantation employers. This definitely was not part of the deal.
MEF is of the view that the proposed unemployment insurance would be a bailout for a small number of irresponsible employers not complying with the current provisions under various legislations, which are adequate in protecting employee rights.
The proposed pension fund is a duplication of the fund already set up under the EPF.
The proposed unemployment insurance should not be set up as, according to the Human Resources Ministry, the actual amount of unpaid retrenchment benefits as at 2009 was about RM25mil.
In the event that employers and employees in the private sector contribute RM0.50 per month to the proposed RBGF, the amount collected would be about RM11mil per month, or RM132mil a year – of which about 40% or RM52.8mil, would be utilised for administration cost.
The proposal to set up unemployment insurance with a total collection of about RM132mil per year to address the problem of RM25mil unpaid retrenchment/termination benefits does not make any business sense.
More effective and efficient enforcement of the law and regulations by the Government would ensure further reduction in the rate of non-compliance.
The proposal to extend maternity leave to 90 days is also a serious concern. Should maternity leave be extended to 90 days based on the present arrangement, the additional cost to employers is estimated to be about RM1.1bil per year for maternity leave pay.
The additional cost would pose an unreasonable burden on employers and severely impact the overall level of productivity and competitiveness of our nation.
On the issue of public holidays, it is a fact that Malaysia has one of the highest numbers with 18 or 19 public holidays per annum (depending on which state you are in).
Though it is nice to have a day off to celebrate Malaysia winning the AFF Suzuki Cup, the actual cost to employers in terms of wages is in fact about RM1bil per day – and this excludes other losses such as production and services.
It is pertinent to note that presently, based on a five-day work week, there are only 142 working days per year (after deducting weekends, public holidays, annual leave and 60 days’ maternity leave).
Whilst the above proposals are being actively pursued by the authorities, the proposals by the employers’ community to have more flexible labour laws to effectively manage their human resources have been left on the back burner.
SHAMSUDDIN BARDAN,
Executive Director,
Malaysian Employers Federation.
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