Overview

Malaysia is a federal constitutional monarchy, ruled by a coalition government made up of several major political parties. Malays account for 58 percent of the population, followed by Chinese, Indians and others. The Malays and other ethnic minorities have received economic and education privileges under the National Development Policy. The uninterrupted rapid economic growth of almost 9 percent in the past decade has helped the country to drastically reduce poverty and unemployment, to improve income distribution and to avoid interracial conflicts. Per capita income was US$4,650 prior to the crisis.

Malaysia was affected by the Asian economic recession. The currency depreciated by 30-40 percent and real GDP growth fell from 7.8 percent to minus 6 percent, resulting in a retrenchment of 100,000 workers in early 1999. Unemployment increased from 2.5 percent to 3.7 percent. The Government has made a significant effort to strengthen economic fundamentals and to improve corporate governance to bring about a fast recovery. The economic recovery that began late in the first quarter of 1999 has continued to expand. Most economic indicators have been increasing steadily, signalling that Malaysia is on the way to a strong rebound from the 1998 recession. Strong external demand, an undervalued exchange rate, and robust levels of government spending and low interest rates have driven the recovery. The real GDP growth rate of 4.3 percent in 1999 is a sharp contrast to the previous year’s rate, when there was a contraction of 7.5 percent. The unemployment rate has continued to decline and the government Labour Force Survey reported a decline of 25 percent in unemployment in the second quarter of 1999 with an annual rate for the year estimated to be below 3.2 percent. The economic recession has played a crucial role in the restructuring of Malaysia’s foreign policy and its relations within the region. Malaysia reinforced through its foreign policy the importance of ASEAN as a vehicle for intra-regional solidarity and mutual assistance. The financial crisis has, for the Malaysian Government, cast a doubt on the ability of international bodies to respond appropriately to future crises, if any, of the region.

The Malaysian population is projected to increase from 22.7 million in 1999 to 27.4 million in 2008. It is estimated that 13.4 million or 48.9 percent of the population will be female. The labour force participation rate for females is estimated to be 49 percent by the year 2001 and is expected to increase with the new labour policies, which encourage the employment of female workers, being implemented by the Government. Through the foresight of the government in not following the international standard approach (IMF) Malaysia believes that the country would appear to have been saved from much of the mass unemployment, prolonged recession and civil unrest that has marked the impact of the financial crisis in several countries that had to adopt the IMF’s solution.

ILO Constituents

The Ministry of Human Resources (MOHR) is the ILO’s principal government contact in Malaysia. MOHR has requested ILO technical assistance to address the social impact of the economic recession and other issues in the field of labour, such as the employment of women and part-time workers, labour market information system, training in conflict management and OSH management.

The Malaysian Employers' Federation (MEF) is the main employers’ organization. ILO has maintained good relations and regular dialogue with MEF as well as extended technical assistance in a broad range of areas. In 1999, the ILO provided advisory services consisting of training in labour statistics and computerized labour market information systems to strengthen the research and information capacity of MEF. In 2000 and 2001, EASMAT specialists in industrial relations and labour administration continued to contribute to the Diploma Courses in industrial relations and fellowships to MEF staff in IR, staff training and organizational development were granted. A workshop on collective bargaining and Performance Related Pay System is scheduled to be held in October 2001.

The Malaysian Trade Union Congress (MTUC) has been the only national workers' organization attending the ILC since the rotation system came to an end in 1996. The Congress of Union of Employees and Civil Service (CUEPACS) represents workers in the public sector and its affiliated unions are also members of MTUC. Mr. Zainal Rampak, MTUC President, has served as a GB member since 1993 and was appointed Senator of the Malaysian Parliament in December 1998. MTUC has been actively involved in Malaysia's labour policy formulation and action plans. Its experience helps strengthen policy dialogue with the ILO. MTUC also serves as a resource base for ILO assistance to workers' organizations in neighbouring countries.

Technical co-operation

In the past few years MOHR has made over 40 proposals ranging from very specific requests to policy and strategic issues like gender equality in employment, social security and child labour. ILO delegation was invited to participate in the 3^rd Conference on Occupational Safety and Health organised by the National Institute of Occupational Safety and Health and focussed particularly on the OSH in small and medium-sized industries (SMIs). The recent development of the action-oriented OSH activities of SMIs, small farms and construction sites in Asia was addressed with much emphasis on the integration of participatory action approaches into national OSH policies to facilitate concrete workplace improvements. In this connection, UNDP has expressed its interest in inviting the ILO to contribute out technical expertise in the OSH project funded by UNDP and the project is now operational. In addition, the ILO/Japan Asian Pacific Regional Seminar on Occupational Safety and Health Management Systems was held in Kuala Lumpur in May 2001 to introduce the ILO guidelines on occupational safety and health management system. Eleven member countries participated in the seminar.

Besides, ILO was invited to participate with the Ministry of Human Resources in its conference on Skill-training for the K-Economy. Our Specialist presented a paper on a New Growth theory related to the change of paradigm from the neo-classical model of economics, based on capital and labour to one that includes knowledge as a third factor in the new growth theory of economics. In April 2001, an ILO/MOHR National Tripartite Workshop on Workplace Learning in a Globalizing World was held in Kuala Lumpur in October to identify the most appropriate policies and strategies to address the development of workplace learning and bring about a better institutional/workplace linkages to address the challenge of globalization and rapidly changing technology in Malaysia.

Social Protection Reform: Malaysia's social protection system has been developed over the past 30 years with technical advice from the ILO and through UNDP projects. Under this funding arrangement, the ILO is assisting Malaysia in preparatory work for implementing proposed reforms, such as designing a social security scheme for the self-employed and actuarial projections for a social

insurance-based retirement pension scheme. UNDP and SOCSO are planning to have more technical input from the ILO in the following phase of social security project. A proposal of a project on the Development of Social Security Protection Policy and Strategy focusing on the need to expand and reform the social security system available to pregnant women and to extend coverage on sickness has been submitted to the ILO for consideration.

The Training centre of the Employees Provident Fund Social Security Institute (ESSET) is officially operational. The ILO has discussed with the ESSET on the future collaboration on training courses to be provided by this Centre. The ILO is much expected to play a crucial and substantive role in this training centre. An ILO/ESSET national training course on social security financing is being planned to be held in October 2001.

Malaysia’s policy direction in achieving a development national status is contained in VISION 2020 (Malaysia The Way Forward). The vision envisages the development of a caring society "as a social system in which society will come before self and the welfare of the people will not revolve around the state or individual but around a strong an resilient family system." There is a need to provide an economic infrastructure to assist the family in fulfilling this role. The vision assumes this community-based system would be financed on social insurance principle. This vision is to be taken into consideration if and when the ILO is considering of our technical contribution for the country in this area.

Industrial Relations and Labour Standards: The ILO has been providing specialists to assist in the weekend Diploma Course in Industrial Relations for senior personnel/IR executives for the last three years. A technical consultancy service for a review of tripartite industrial court is being planned for the last quarter of 2001, as well as a workshop on collective bargaining and performance related pay system.

International labour standards and tripartism

Malaysia has ratified five fundamental Conventions (Conventions Nos. 29, 98, 100, 138 and 182).

At the request of MOHR, the ILO held a Seminar on the Declaration and the Fundamental Conventions in East Malaysia at the end of 1999 to provide exposure to ILO standards. A national seminar on the same subject is expected to be organised this year.

In May 1998, there was an ILO mission on application of Convention No. 97 to Malaysia to find appropriate solutions to the problem of unequal treatment between foreign workers and nationals. The government was requested to report on the progress made and has indicated that no further technical assistance is required from the ILO on this issue.

Tripartism works well in practice. The National Labour Advisory Council (NLAC) is a main tripartite institution for policy formulation. Two new tripartite bodies, with high level representation, were established to deal with the financial crisis - the National Economic Council, chaired by the Prime Minister, to deal with the national economic action and recovery plan and the National Advisory Committee on Retrenchments to handle lay-off questions and assistance to retrenched workers. A national tripartite seminar on social dialogue is hopefully to be organized jointly by the ILO and MOHR in late 2001, pending a reply from MOHR.

Other important questions

Women Workers and Sexual Harassment: The government has set up a new unit to look after the problems of women workers and the unit has received an increasing number of complaints of sexual harassment. The government has adopted a code of practice in this area for which ILO assistance has been requested to provide training on sexual harassment. The national seminar on action against sexual harassment at work has been held in June 2001 and the ILO/Japan regional tripartite seminar on action against sexual harassment at work in Asia and the Pacific will be held in early October 2001.

Labour Market Information and Monitoring: Technical assistance was provided to MEF to improve its labour market information system with particular emphasis on integrating databases and networking. Advisory services were extended to MOHR. In response to a request from the Ministry of Human Resources for assistance in launching its flagship on information systems, the ILO sent a consultant to assist the MOHR in providing hands-on advisory services during the start-up phase of their Electronic Labour Exchange. The system is designed to fit within the information systems strategy, which has the applications of job clearing system, labour market database, and office productivity support. An ILO/MOHR training workshop on labour market information and information technology development was held at the ADTEC Training Centre in Shah Alam in early July 2001. The workshop was attended by the Malaysian participants as well as the participants in the region of the ILO/Japan Study Tour on Globalization and Active Labour Market Policies. The workshop aimed to enhance the capacity of participants to understand and use information technology for labour market information, labour market analysis and public employment services, as well as to introduce the sources and uses of labour statistics and key labour market indicators and support ongoing planning for information technology development and labour market information within the Ministry of Human Resources. The ILO participation in the workshop represented collaboration between headquarters in Geneva, ILO/Turin and BAO/EASMAT.

Code of Practice on Prevention and Management of HIV/AIDS: The Malaysian Department of Occupational Safety and Health has planned to launch the code of Practice on HIV/AIDS which has been revised by taking into account the comments from the ILO. A seminar to launch the code is planned in early September 2001 and the responsible ILO official will present the ILO’s view on the matter. The ILO is considering a financial support to the seminar.

Indigenous/Tribal Peoples: Malaysia is a country in an inter-regional project to promote ILO Policy on Indigenous/Tribal Peoples. The Regional Coordinator of the project has recently visited several indigenous organizations and learned about their activities with a view to identifying areas for possible collaboration. The Regional Coordinator also met with concerned government agencies and UNDP to inform them about the project, and get initial ideas of cooperation. The project is planning to do some seminars with indigenous organizations next year.