Expanding Employment Act coverage would be ‘extremely cost prohibitive’ for employers — MEF

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PETALING JAYA (Feb 27): The Malaysian Employers Federation (MEF) has expressed concern over the plan to raise the threshold in the Employment Act 1955 from the current monthly salary of RM2,000.

MEF president Tan Sri Azman Shah Haron said any such move would be “extremely cost prohibitive” for employers, as the cost implications are huge.

“The federation has expressed strong reservations against this proposal, and if at all, MEF is of the view that the nature of job should be clearly distinguished between rank and file employees and executives,” Azman Shah said in his welcome address at the annual tax seminar jointly organised by MEF and the Inland Revenue Board Malaysia.

He said the cost of doing business is still a major concern for employers, especially during the current challenging economic environment, due to inflationary pressures and rising social costs.

“This is a major concern as it greatly impacts businesses, especially the SMEs (small and medium enterprises) that are struggling to survive. In fact in recent times, many companies have come to MEF to seek consultation on reorganising their business and retrenchment of workers,” he said.

Azman Shah said employers are faced with ever increasing social commitments as the government succumb to international pressures to align local labour legislations and policies with international labour standards.

“The implementation of the Employment Insurance System (EIS) last year contributed to higher cost of doing business. EIS is not [being proposed] to expand its scope of operations to provide services for other active labour market policies,” he said.

Therefore, the MEF is concerned that the proposals of EIS may duplicate some of the functions of other agencies under the same ministry, such as placement services that is being performed by Jobs Malaysia.

Azman Shah also noted that the government is seeking to align Malaysia’s labour laws with various International Labour Organisation (ILO) conventions, especially with Convention 87 on the Freedom of Association and Protection of the Rights to Organise.

“This would risk disrupting the harmonious industrial relations we have enjoyed thus far and would have huge implications on union activities, such as the creation of omnibus unions,” he said.

“MEF has submitted our feedback on this matter and I think that we may not be alone, as our social partners are also concerned by some of the proposals on freedom of associaton,” he added.