Observation (CEACR) - adopted 2013, published 103rd ILC session (2014)

Migration for Employment Convention (Revised), 1949 (No. 97) - Malaysia - Sabah (Ratification: 1964)

Article 6(1)(b) of the Convention. Equality of treatment with respect to social security. Employment injury benefits. The Committee recalls its previous comments regarding differences in treatment between nationals and temporary foreign workers with respect to payment of social security benefits in the case of industrial accidents. The differences relate to the Workmen’s Compensation Scheme (WCS), which guarantees to foreign workers employed in the country for up to five years only a lump-sum payment of a significantly lower amount than the periodical payments to victims of industrial accidents provided under the Employees’ Social Security Scheme (ESS), while Malaysian nationals and foreign workers permanently residing in Malaysia (Sabah) continue to be covered by the ESS. The Government indicated in November 2012, that it was conducting an actuarial study considering the following three options: (i) extension of ESS coverage to foreign workers; (ii) creation of a special scheme for foreign workers under the ESS; or (iii) raising the level of benefit provided under the WCS so as to be equivalent to that of the ESS benefit. Upon the completion of the study, continuous engagement with the stakeholders would be carried out before the most suitable option was determined. Further, the Committee understands that the Social Security Organization of Malaysia (SOCSO) is considering the preparation of a technical study on the potential creation of a separate fund and scheme for the coverage of foreign workers, and has requested ILO technical assistance in this regard. With respect to industrial accidents, the Committee hopes that the actuarial study will be finalized shortly, and refers the Government to the comments made under the Equality of Treatment (Accident Compensation) Convention, 1925 (No. 19), with respect to Peninsular Malaysia. The Committee notes, however, with regret that the Government has not submitted its report on the application of Convention No. 19, due in 2013, and therefore the Committee has no further information on the progress made with respect to the actuarial study.

Other social security benefits. With respect to other social security benefits, the Committee notes the information provided by the Government regarding the content of the Memoranda of Understanding concluded with countries of origin, which, however, does not specify how it is ensured that no less favourable treatment is applied to migrant workers than to nationals in respect of social security benefits, including medical care, old-age, invalidity and survivor’s pensions, as well as sickness and maternity benefits. Taking into account the large number of foreign workers concerned, the Committee requests the Government to provide information on the steps taken, including the conclusion of bilateral or multilateral agreements, to ensure that migrant workers do not receive treatment which is less favourable than that applied to nationals or foreign workers permanently residing in the country with respect to all social security benefits. The Committee also requests the Government to provide information on any developments regarding the actuarial study with respect to industrial accident benefits and the technical study considered by SOCSO, and the results achieved.

Minimum wages and the foreign worker levy. The Committee notes the National Wages Consultative Council (NWCC) Act 2011 (Act 732) and the Minimum Wages Order 2012 providing for a regional monthly minimum wage of 800 Malaysian ringgit (MYR) for Sabah, to be implemented as of 1 January 2013. It also notes the Guidelines on the Implementation of the Minimum Wages Order 2012 (the “Guidelines”) published by the NWCC (6 September 2012), as well as its press statement of 13 March 2013 on the implementation of minimum wages. The Committee notes that the Minimum Wages Order 2012 applies to “employees” as defined in section 2(1) of the Schedule of the Labour Ordinance (Sabah Cap. 67), thus covering both nationals and foreign workers, but excluding domestic workers from its application. It also notes from the Guidelines that accommodation and food supply are excluded from the minimum wage. The Committee further notes that pursuant to the Minimum Wages (Amendment) Order 2013 certain enterprises were allowed to defer payment of minimum wages until 31 December 2013, but that as of 1 January 2014, all employers employing foreign workers will have to pay the abovementioned minimum wage. The Committee also notes that the document on the Minimum Wage Policy (March 2013) issued by the Ministry of Human Resources states that employers who have implemented minimum wages are allowed to deduct the actual amount of the foreign worker levy on a prorated monthly basis, as well as the cost of accommodation not exceeding MYR50 per month per person. In special circumstances, based on individual merits, the Labour Department may consider applications to deduct the cost of accommodation exceeding MYR50 a month. The Committee notes from the Government’s report the rates of the foreign workers’ levy according to sector of employment enforced from 11 September 2011 (agriculture: MYR410; manufacturing: MYR1,100; construction: MYR1,100; social service/personal: MYR1,490 (except welfare home and island resort) and domestic work: MYR410). The Committee had previously noted the Government’s indication that the levy could not be deducted from the wages of the worker. The Committee had in the past also warned against the possible negative impact of such a levy system on the wages and general working conditions and rights of migrant workers, especially when levy rates are high and being deducted from employees’ wages. The Committee therefore considers that allowing, in practice, the amount of the levy to be deducted from the minimum wages of foreign workers may result in less favourable treatment of these workers with nationals, contrary to Article 6(1)(a) of the Convention. Given the ambiguity in the Government’s previous statement and the Minimum Wage Policy (2013) of the Ministry of Human Resources regarding permissible deductions to minimum wages of foreign workers, the Committee requests the Government to clarify whether employers are still allowed to deduct levy and accommodation costs from the minimum wages of foreign workers, and provide the text of the legal provisions or the policy in this regard. The Committee asks the Government to take the necessary steps to ensure that employers do not deduct, in practice, the levy amount from the minimum wages paid to foreign workers and to provide information in this regard. Recalling that the Government had previously indicated that it was willing to examine the impact of the levy system on the working conditions and equal treatment of migrant workers, including wages, the Committee requests the Government to undertake such an assessment and provide information on its results and any follow-up given to it.

The Committee is raising other points in a request addressed directly to the Government.

[The Government is asked to reply in detail to the present comments in 2014.]