22-28 February 2013 #644

No big deal

There will be minimal benefit to Nepal from the hike in minimum wage for workers in Malaysia
Sunir Pandey

HARD WORKERS: Nepali workers throng the small Nepali Embassy in Kuala Lumpur. The embassy had no comment on the resistance from many Malaysian employers to implement the government’s minimum wage policy for foreign workers that went into effect on 1 January.
When the Malaysian government increased the minimum wage for domestic and foreign workers to at least RM 900 (Rs 25,172) last month, Nepalis there were overjoyed. Back in Kathmandu the media splashed headlines about the move, and projected growth in remittances from the nearly half-a-million Nepali workers in Malaysia. Recruiting agencies were flooded with queries from people eager to get on the next plane to Malaysia.

But what the Malaysian government gave with one hand, it was pressured to take with the other. It announced the minimum wage increase and a month later, workers were required to pay a housing and food levy to employers after it came under pressure from factory owners.

“The cabinet’s decision to make migrant workers pay for the levy is immoral and unjust,” said the labour group, Tenaganita about the levy, “migrant workers as one of the least paid and most exploited workers in the country will see a further erosion of their meagre income.”

The labour welfare organisation, Jaringan Rakyat Tertindas (Jerit), submitted a complaint to the government about abuse by employers of the minimum wage policy in which benefits such as transport, overtime, and other allowances were revoked. The wage hike has also stirred anger among Malaysian workers, who feel foreign workers got bigger hikes and have more allowances than them.

The 40 per cent rise in wages, it was argued, meant the workers could now afford their own housing and food. An average Nepali factory worker who used to earn RM 350 had his wage increased to RM 900, but would have to spend up to RM 100 on average on food and housing per month, meaning that the hike would eat into a chunk of his savings.

As frustration rose among foreign workers, including Nepalis, in Malaysia, the first strike this month shut down a furniture factory in Johore that refused to implement the minimum wage. But the anger was even greater among factory owners, who said the wage hike would make them uncompetitive. The Malaysian Employers Federation, an umbrella body of manufacturers, lobbied the government to get tough and even deport striking workers.

Fadli Adilah, Charge d’Affaires at the Malaysian Embassy in Kathmandu told Nepali Times foreign workers were essential to fuel Malaysia’s economic growth and keep the industries running.

“It’s all about supply and demand,” he said, “the minimum wage decision applied to both foreign and domestic workers, and we don’t expect there to be a drastic change in the number of Nepali workers in Malaysia.”

The Embassy doesn’t expect recent decisions to dissuade workers from going to Malaysia, and the wage controversy doesn’t seem to have discouraged Nepalis from seeking work there. In fact, statistics point to the contrary.

Malaysia still remains the third largest foreign employer of Nepalis after India and Qatar (see below). On average, more than 10,000 Nepalis leave for Malaysia every month, and nearly 120,000 have gone there since July 2012.

Even before the Malaysian government raised the minimum wage, employers there had warned that the Malaysian furniture industry would be hardest hit. Petrol stations, where thousands of Nepalis work, said they also would not be able to afford the higher wages. In December 2012, business owners had asked their government to withdraw the decision fearing negative impact of the move on small and medium-sized companies.

The Nepali Embassy in Kuala Lumpur failed to respond to our queries about the impact of the wage hike on total remittance figures from Malaysia, or if it expects Nepalis workers to think twice about going there. The embassy website does have a pop-up notice informing visitors of the rise in wages.

Narayan Dahal of Jhapa came back to Nepal in December 2012 after seeing out a three-year contract at a plastic factory in Selangor. His employers housed him at a hostel and even paid for medical checkups. Narayan admits his employers were kind, and that other Nepalis he met in Malaysia were not as lucky. Nevertheless, he still wants to go back.

“My monthly salary was about RM 460,” he says. “Maybe I can earn double if I go back soon. Hopefully I will also get to work overtime.”

Malaysia depends heavily upon foreign labourers, considered cheaper alternatives to local workers who tend to switch to better jobs more frequently, and treats them at par with domestic workers.

But given the recent strike and debates about minimum wages, with companies looking to cut costs, it seems likely that thousands of people like Narayan will find that their chances of earning a higher minimum wage depends more on their employers’ financial capability than any state decision to increase it.

See also:

Let them eat burgers

"Political stability for economic progress"

Arabian plights

One in every five person on the streets of Doha is a Nepali. Qatar is the second largest employer of Nepali workers after India, and the gas-rich Gulf state will be a major source of remittance for the country for the next eight years as it embarks on a multibillion dollar construction scheme to prepare for the football World Cup in 2022.

This week, Human Rights Watch concluded that Qatar will be a ‘crucible of exploitation’ ahead of the games because of poor working conditions for foreign workers from the subcontinent, including Nepal. In January, the Nepal embassy in Qatar successfully negotiated a raise in minimum wage and allowances for Nepalis from 800 riyal (Rs 19,161) to 1,200 riyal (Rs 28,742).

This has resulted in a drop in demand for Nepali workers say recruitment agencies in Kathmandu. Qatar is also feeling the pinch of a construction slump as international gas prices collapse because of the increasing use of shale gas in the US. Every month, nearly 20,000 Nepalis, mostly men, leave for Qatar.

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