Observation (CEACR) - adopted 1992, published 79th ILC session (1992)

Right to Organise and Collective Bargaining Convention, 1949 (No. 98) - Malaysia (Ratification: 1961)

The Committee recalls its previous observations concerning inconsistencies between the national legislation and Article 4 of the Convention which covered the following points:

- limitations on the scope of matters open to collective bargaining (section 13(3) of the Industrial Relations Act, 1967);

- the prohibition from including in collective agreements for so-called "pioneer enterprises" and for any other industry which might be specified by the Minister, provisions that are more favourable than those contained in Part XII of the Employment Ordinance, 1955 (section 15 of the Industrial Relations Act); and

- restrictions on the right to bargain collectively for employees in public administration other than those engaged in the administration of the State (section 52 of the Industrial Relations Act).

In general, the Committee takes note of the Government's view that there should not be a legalistic or technical approach taken over the application of ratified Conventions in this era of increasing protectionism adopted by certain trading blocs and that the attempts by developing countries to develop their economies and eradicate poverty should be looked at in a positive light. Noting further that the Government undertakes to take appropriate measures to amend its laws as and when the political, economic and social conditions of the country warrant it, the Committee points out that the Government's aims would be assisted rather than obstructed by the functioning of a full and free system of collective bargaining, such as promoted by Article 4 of the Convention. Moreover, while aware of the various socio-economic pressures facing member States, the Committee would recall that it has always carried out its task of monitoring the application of ratified Conventions on the basis of the universality of standards, assessing the effect given to the obligations arising from ratification irrespective of the political, social or economic systems or level of development prevailing.

1. The Committee notes the information supplied in the Government's reports, in particular its comments that those areas listed in section 13(3) of the Industrial Relations Act are regarded as common law rights of employers which should not be the subject of negotiations because this could lead to prolonged strife since managers are unlikely to agree to any erosion of their rights during the process of negotiating a collective agreement. As in past reports, it stresses that workers and unions nevertheless can raise these issues with employers if employers exercise their rights unfairly or with mala fide, and can even raise them as trade disputes subject to conciliation proceedings and referral to the Industrial Court. The Committee notes with interest that according to the Government's report when disputes arose over dismissals of workers, retrenchments and layoffs, promotions, allocation of duties, transfers, demotions and other management prerogatives they were treated in the same manner as proposals for collective agreements are treated, namely through negotiations, conciliation and arbitration. The Committee is of the opinion that the legislative exclusion from bargaining of certain matters relating to conditions of employment (such as those in this case: promotion, transfer, appointment, dismissal and assignment of duties) is not compatible with Article 4 (General Survey, 1983, paras. 307 and 311). It accordingly again asks the Government to take steps to bring section 13 into line with the obligations arising under the Convention - and with its description of the actual practice concerning these issues which is equivalent to collective bargaining practices in Malaysia.

2. Regarding the Committee's comments on section 15 of the Industrial Relations Act, the Government states that the granting of pioneer status to certain industries is part of its various strategies within its macro strategy to promote investment, stimulate industrial growth and generate greater employment opportunities; it stresses that section 15 does not limit negotiations on monetary items (wages, allowances) but only on hours of work, holidays, annual leave and sick leave and this only for a period of five years. It points out that this is not a complete ban since the parties can negotiate more favourable terms in these industries and seek the approval of the Minister; he has to date never rejected any such request made to him. The Committee notes these various comments but indicates that this provision is contrary to the principles set forth in Article 4 which aims at voluntary collective bargaining free of the obligation of submitting concluded agreements to administrative authorities for approval (General Survey, paras. 308 and 311). Noting with interest that the Minister has never rejected an agreement which accords more favourable terms on these items, the Committee invites the Government once again to amend section 15's limitation on bargaining.

3. The Committee takes note of the Government's statements that the exclusion of public services from certain provisions of the Act is due to the differing objectives of the public and private sectors; public sector wage adjustments involve nearly 850,000 employees and can have serious implications on the government budget; the existence of the five national joint councils (NJCs) for the public service testifies to the fact that a form of negotiation and consultation is afforded to these employees which led, in 1989 and 1991, to significant pay rises. The Government adds that it has started privatising certain public enterprises, such as the Department of Telecommunications and the Electricity Board, following which the employees concerned can bargain collectively. Moreover, the NJCs will undergo a major review to suit the New Remuneration System for the public sector, to be implemented as of 1 January 1992. The Committee points out that the consultations in the NJCs are not sufficient since any resulting recommendations must be submitted for final approval to the Cabinet Committee and thus are out of the hands of the bargaining parties. Since, in the Committee's opinion, this system does not fully afford employees who are not in the category of public servants covered by Article 6 of the Convention the right to bargain, it would ask the Government to ensure that the public servants not engaged in the administration of the State (such as those serving in public utilities) enjoy the right fully to negotiate their terms and conditions of employment - just as private sector employees do. It also recalls that any concerns as to the cost implications of such bargaining could be addressed through persuading the parties to have regard voluntarily to major economic and social policy considerations and the general interest, so that persuasion is used rather than constraint (General Survey, para. 313). In this connection the Committee asks the Government to supply information in its next report on the implementation of the New Remuneration System for the public sector. The Committee draws the Government's attention to the fact that the Office is at its disposal for any technical assistance that it may wish to request in relation to these three long-standing matters.