Tuesday, August 7, 2012

Labour Flows and Economic Fault Lines Within the ASEAN region: Livelihood in the Age of Neo-Liberalism

Labour Flows and Economic Fault Lines Within the ASEAN region:
Livelihood in the Age of Neo-Liberalism
- Charles Hector
[ * This paper was presented at the Princess Maha Chakri Sirindhorn Anthropology Centre (SAC) Anthropology Conference entitled Envisioning the ASEAN Socio-Cultural Community: Culture, Conflict and Hope held at the SAC from 28th - 30th March 2012.Bangkok, Thailand]

The topic today is interesting and it can be also confusing. For example, what is the meaning of ‘economic fault lines’? It means very different things to different people, governments and entities. For some it is the growing inequality that is arising amongst persons, families and the communities of people, and for others it is the ‘threats’ to the well being of free market and profit making, including also the threats by reason of an ‘over-reliance’ on a very fragile global-market, which today is very much governed by speculations rather than actual reality, by nation states, including ASEAN member nations. 


Then, we have the term ‘neo-liberalism’ – new liberalism which somehow is different from the traditional notion of liberalism or capitalism. ‘…Neo-liberalism was an ideology and a political philosophy with its own values of public responsibility. It had a very precise view of what economic systems should be and what kind of supporting financial system should underpin it. The distinguishing feature was the privatization of utilities essential for public good general welfare, such as water, power, public transport, health and other services, irrespective of whether they were efficient or not whilst under the control of the State...’ 

Neo-liberalism encouraged low taxation, mobility of labour to keep wages low, unrestrained mobility of finance, and the rise of the stock/commodity/share/currency markets as a means of financialization which also became an indicator of the economic welfare of the State. Remember that the value of stocks/commodities/shares/currency can so easily rise or drop, irrespective of the fact there really is no changes in actual production, supply and demand or the fundamentals. Today, speculation rules.

With the advent of neo-liberalization, traditional indicators like the general well being of persons and their families took a second place to the general wellbeing of the state, or is it not really businesses? Matters like equitable distribution of wealth and opportunities amongst individual persons and their families, or access to basic amenities and rights took second place.

Labour Flow

Labour Flow – this also is a phrase that would be used by proponents of ‘neo-liberalism’ or capitalism, for the phrase itself describes human labour as a commodity, necessary for production, and we say ‘Labour Flow’ not  even ‘Human Labour Flows’. For, no more is the human person of importance but just productions, profits and labour. The human being including the human worker, or even human rights or worker rights, really is of little importance, save just to paint a better picture meant for the consumption of the masses or to possibly placate the oppressor and their collaborator’s conscience – a ‘mere puff’. 

Livelihood and the welfare of Workers and their families are generally no more important to governments, as priority shifted to heath and wellbeing of business and profits, and as such steps have been  taken to remove ‘obstacles’ that human labour could cause to businesses and their profits. I would look at these disturbing trends and demonstrate how individual workers and their families, and their trade unions have been suffered by reason of this ‘neo-liberalization’ later on in this paper, and for now we will look at labour flow.


Throughout history, people have been moving from rural to urban centres, within countries and across borders in search of a better life, be it for better employment - better employment with higher wages and/or better working/living conditions, for better income earning activities including small businesses or trade – all for the purpose of betterment of their own life and livelihood and that of their families and dependents.

USA, Australia and New Zealand are examples of countries today, whose people are migrants originally who now rule. Likewise, the ASEAN member nations are nations where many of its people are descendants of migrants. In Peninsular Malaysia, the indigenous population is only a couple of hundred thousand today, and even the Malays, being the first of the migrants is about 55% of the population, whilst the rest are later migrants coming originally from China, India and other lands. Then, just a few decades ago in most countries, migration got controlled and subsequent migrants were treated as ‘temporary guests’ allowed in only for particular purpose, expected to return at a later date back to their country of origin.

To be complete, employment, better wages and/or income or better livelihood was not be the only reason for migration, for it also was to escape from oppressive conditions existing in their own home environment, an example of this would be those from Burma. Some are escaping economic, social cultural or even environmental conditions in their home country in a quest for a better life elsewhere. There are other reasons too.

This movement of people could be temporary or even permanent in nature, sometimes even starting off as something anticipated as temporary that changes to become a permanent home after that. Sometimes, this movement of people are self-initiated, sometimes ‘forced’ or at other times even encouraged by others including their own governments  and other governments, and others seeking human labour for their business enterprises in other countries.

In Malaysia, for example in the pre-independence period, we see the bringing of large numbers of people from India, China, Sri Lanka and other countries, which was facilitated and encouraged by the British colonial government and associated companies who needed human labour for their tin mines, rubber plantations and other sectors, whereby at the end of the day many of these migrant workers and their families settled down and later also were given citizenship. These workers were promised  free land and homes for themselves and their families, over and above good wages and work benefits.

Even today, many countries including ASEAN countries continue to woo and encourage migrant workers from their countries to other countries with the promises of good paying jobs, but there are significant differences which we shall be looking at today. One difference is that all that they want is only the worker – not their families, not even if they are willing to fork out their own cost of travel.


Human migration as a phenomena, is nothing new, but today nation States seems to be adopting a different attitude towards migration of people, wanting not just to control this movement but to also  profit from this movement. Values has changed for today labour is more and more treated as a commodity – forgetting importantly their humanity, and the general entitlement to universally recognized basic human rights worker rights, all essential for the well being of people, including workers, and their families.

Today, labour flow of migrant workers, are actively encouraged by both countries of origin and also host countries that ‘need’ workers, and nation states have stepped in wanting to control it and profit from it, and the underlying primary object is no longer the protection of its people by the host countries, or the assistance of employers in host countries that need workers.

The control today seems to be motivated by reasons of income generation or profit making by both countries of origin and host countries – and this is done by the imposition of various kinds of fees, levies  and other mandatory conditions like compulsory medical/health testing on entry and every year thereafter, the compulsory buying of insurances  – including medical insurances, some of which the worker themselves have to personally pay for.  This monitoring or documentation also helps earn monies through passport renewals, and also for taxation purposes. Restrictions as to opening banking accounts, and the taking of cash monies back with them when they return home  - also generates large income for banks and other entities involved in the business of remittances .

Migrant workers, and labour flow today has become a source of income for governments and third parties. You may ask why this has happened.  Well, with the advent of free trade and open market, most countries, including ASEAN member states, by reason of World Trade Organization(WTO) Agreements and various other Free Trade Agreements(FTAs) lost previous sources of income generated through taxes, import-export duties, etc which came primarily from foreign multinational corporations(MNCs). All these were removed to create ideal free market conditions  – where there can be no more protection, differential treatment, trade barriers, taxes, duties, etc.  Coupled with this is the fact that to woo foreign companies, many governments do in fact give other incentives like tax-holidays and other preferential rates and treatment. ASEAN, contrary to the best interest of ASEAN, have allowed themselves to be divided and are in competition with each other when it comes to many of these bilateral FTAs. At the end of the day, it is ASEAN member states and locally owned companies that are losing out.

Note that today, countries cannot anymore impose obligations on foreign companies with regard to ‘transfer of knowledge and/or technology, local quotas with regard management/supervisory staff, necessary requirement to use a certain percentage of locally produced products in production, etc – hence for ASEAN member states, who are developing countries, there is further loss in terms of not just sources of income but also losses in terms of transfer of technology and know-how which certainly would have benefited its people and made it more competitive in today’s global market.

Despite this, ASEAN member states, still need to bring in foreign companies to ensure financial security, and also general ‘security’ to survive in current global environment, dominated by super powers and their friends who have the capacity to threaten or act against nation states that they consider antagonistic to neo-liberalism or their interests. But this will not excuse our governments, for they too have chosen to follow the trend and reap benefits for those who have political and economic power to the detriment of the ordinary person.

End result is that today, no more is the primary reason of inviting MNCs into their countries is for the purposes of generating employment and income for the local workforce, or for the acquisition of greater knowledge and skills of the local citizenry, or income generating opportunities of related local companies. New income sources unfortunately are workers – including migrant workers.

Migrant workers, though brought in based on agreements to work for 3 to 5 years, are only issued work-passes/visas to work usually for 1 year, and the host countries authorities do not require these actual agreements, but only the agreement for work for 1 year. Migrant workers are also given the work passes/visas on condition that they pass their annual medical/health tests, and must forego their freedom of association. They are prevented from bringing their families with them, and are not permitted to fall in love or get married during their period of employment in the host country. They cannot also get pregnant – for if they do, they will be sent back. In Malaysia, migrant worker’s work pass/visa are also restricted to a particular employer – hence the option to change employers in the host countries is generally nil. Claiming rights and the access to justice is also effectively denied to migrant workers. Why whenever they claim their rights, or even use the mechanisms of access to justice, the repercussion by employers and host nations is the termination – hence cancellation of work pass/visa – hence the right to remain legally in the host country legally – hence ‘deportation’ or arrest, detention, whipping and then deportation.

Both the countries of origin and destination countries are both guilty of not doing enough for the protection of migrant workers rights, more so when they do play such an integral part in controlling human migration. India, for example, did insist on both the Indian worker and the employer from the destination country sign a standard employment agreement which included worker rights. How many ASEAN countries do this? How many ASEAN countries even come to the assistance of their migrant workers from their countries to ensure that they are able to successfully claim their rights in destination countries? Experiences have shown that both countries of origin and destination countries real concern is income generation aspects of human labour migration – not so much the issue of human rights or worker rights.

It is easy to blame neo-liberalism and powerful nation states, but really blame also equally lies on persons who hold political power in our ASEAN region, who have chosen to abandon ASEAN values and principles, and have become more driven by economic gains for themselves and their cronies. Today many enter politics, not so much by reason of ideologies but by reason of reaping financial benefits for themselves and their associated businesses.

Sadly most of the leaders in our governments today are from a corporate background, having also direct or indirect interest in businesses – and as such, it is not shocking that the policies and their actions are pro-business and human workers are important only for the provision of labour.

Rights, Welfare, Livelihood and Security of Workers and their families are an obstacle
Workers and their families generally are no more important to governments, as priority shifted to business and profits, and as such steps were taken to remove ‘obstacles’ that labour could cause to businesses and their profits. Cheap problem-free workers, that could easily be utilized when needed and disposed off when not needed was now the objective of nation state to woo and keep businesses within their boundaries.

From Permanent Employment Until Retirement to Short-Term Contract Employment

First to be dismantled was the right to a secure employment relationship between workers and their employers until retirement. This was replaced with short-term or fixed duration contracts of employment, which lasted one year or less, with no guarantee or safeguard of a renewal of employment contract even if the employer still needs workers at the end of the contract period. For those, who already were permanent employees, employers used various means to destroy this relationship and to replace it with short-term contracts. One methods used was the outsourcing of work to 3rd parties, hence forcing employees to leave and enter new short-term contracts with these new employers or face retrenchment. Another method that was employed was, like in Malaysia was the Volunteer Separation Schemes(VSS), which the government also encouraged, and many workers lost their permanent employment only  to be back working with the same employer but this time under short-term contracts. Public sector employees also lost permanent employment with pension rights, when privatization happened.

Usage of ‘bonded’ controllable easily abused Migrant Workers

Secondly, was the active highly controlled bringing in and allowing of migrant workers who were willing to work for lower wages to be employed in the country. One reason for this was to avoid demands for better wages and benefits from local workers and their unions, which would have succeeded if left to market forces.  In Malaysia, for example, when migrant workers were brought in they were bound to work for just one particular employer for a defined period of time, totally deprived of the right to be able change employers even when the employer cheats them by not giving them agreed wages and benefits, and if the migrant worker complaints or fights for their rights, very easily are they terminated and their work passes/visas cancelled, and they have little choice but to leave the country back to their country of origin and if they have not work for the entire contractual period, then even the cost of going home will be theirs to bear. Access to justice is available to them just like any other worker, but even if they have complained or started using these mechanisms, it matters not for the work passes/visas will still be cancelled, and they can no longer remain legally in the country. To stay on in the country,  even  to pursue their claims in the Labour Courts, is near impossible, and their presence after work passes/visas are cancelled is a crime – where they can be arrested, detained, charged in court, convicted, and today the sentence includes whipping, and thereafter deported. The fact that they have lodged complaints in the relevant avenues for justice is irrelevant. The fact that they have outstanding claims is irrelevant. Even, in the unlikely event, they are allowed to stay, they have no right to work and earn an income to sustain themselves.

Hence, migrant workers became a preferred source of labour for many employers – bonded and forced to work for the one employer, so very easily forced to work overtime, rest days and even public holidays, so very easily cheated of their rights and benefits who really have no real option or avenue of complaint of remedy in the home country, and so easily gotten rid off.

It is not uncommon for many employers to not even pay wages of many months close to the end of their employment contract, or even retrenchment benefits. Having also been deprived of their original passports and the relevant work visas/passes, it is so easy to get them arrested, detained and even deported by the police and immigration authorities. All that needs to be done is just not turn up at the police station or the immigration detention depots and claim their workers. It is so easy to just allege that the said workers have run away.

Using Just Labour Without Employment Relationship or obligation to protect worker rights
But then short-term contract workers and migrant workers were still employees of the factory and workplaces they worked at, and the employers still had duties and obligations as employer to ensure that the rights of these worker-employees as provided for by existing national laws, and also collective agreements entered with trade unions of workers. In Malaysia, where one of the condition imposed by the Immigration Department when work passes/visas are issued is the deprivation of the right/freedom of association, but Malaysian workers and trade unions in reliance of the existing Trade Union Act have always taken the position that migrant workers like local workers are entitled to form and/or join trade unions, and as such migrant workers working in factories and workplaces that do have unions can become members, and automatically is entitled to all the better rights and benefits as contained in Collective Agreements.

What if we can just use their labour without entering into an employment relationship with these workers? That way we can totally avoid all obligations placed on employers to recognize and protect rights of employees as provided for in law and other international standards that the particular country is bound to. So, on about 2005, the Malaysian government made a policy and allowed factories and workplaces to use workers, without having to enter into any employment relationship with these workers. The factories and workplaces were allowed to just use workers supplied by third parties, i.e. the labour/manpower suppliers, who were called outsourcing agents/companies, and the said workers supplied by them at factories and workplaces were simply referred to as ‘outsourced workers’. For the work done by these workers, the factory and/or workplaces just pay the outsourcing agent/company, who then pay directly the workers that they supplied. This arrangement was most profitable  for these labour suppliers, who will continue to parasite on the sweat and toil of workers working for another who have work and need workers. If they are not employees, then they cannot form/join trade unions at the factory and/or workplaces, and will have no right to demand better wages, working conditions or work benefits from the factory and/or workplaces.

Well in Malaysia, all this started on or about 2005, first with migrant workers but today is also includes local workers. In some factories in Malaysia today, about 50% of their workers are these ‘outsourced workers’ – and this new phenomena certainly also affect directly employed workers and their unions, for definitely their bargaining powers with their employers have shrunk and will continue to shrink – until finally workers will lose this most important right and avenue for claiming better wages, better working conditions and better benefits from their employers.

In 2010, the Malaysian government tried to give statutory recognition to this adulterated unjust employment relationship by extending the definition of employer to include labour/manpower suppliers, and the fact that these ‘outsourced workers’ are in fact and will continue to remain employees of these manpower/labour suppliers, and in end 2011, despite worker, union and civil society protests, it was passed in Parliament. Now, the labour supplier called ‘contractor for labour’ in the now amended Employment Act, has been legally recognized also as the employer of workers even after they are supplied to factories and workplaces and start working under the control and supervision of the principal or owners of the workplaces. The discrimination of workers at the workplace doing the same work, the deprivation of the right to join trade unions at the workplace, or benefit from Collective Agreements, despite being contrary to International Labour Organisation(ILO) and UN standards and principles have just gotten legal recognition in Malaysia. MNCs and factories finally get their wishes of having just labour without having any employer’s obligations and duties, and human worker suffers.

The Way Forward

ASEAN peoples, by reason of culture and religion, traditionally have positive values and principles that place the welfare and rights of human persons, including human workers, as being of primary importance. Unfortunately, our governments have strayed away from these principles and values, and today places greater importance on the well-being of business and profits rather than the human persons, and the people, being the ultimate holders of real power, usually exercised by the ballot box in democracies need to do the needful so that we can get back to prioritizing the protection of the livelihood, welfare and rights of human persons and workers and their families.

Countries that have advocated capitalism, liberalism and even now neo-liberalism are failing, for even in the US, the biggest champion of neo-liberalism, we see this failure not only by emergence of the fourth world (the growing number of homeless, etc), but also a shocking failure in terms of healthcare and general social welfare of its people – something that finally they are taking cognizance of and trying to address. As such, there is a serious need to maybe develop a new way of doing things, an alternative to neo-liberalism.

ASEAN has more than half a billion in population, and it is rich with natural resources, and as such needs to assert itself and act collectively, avoiding itself to be divided and taken advantage of by the richer more powerful nations in the world, and really the MNCs and business communities.

For workers and their families, permanent employment and direct employment relationship with principals and owners of workplaces is essential, for this is a fundamental right flowing from which is also a determination of all other factors affecting livelihood including housing, education of children, healthcare, and financial security during old age, and a worker on a short-term contract is denied this right and is further visited with stress, including of not knowing where income for his livelihood after his short-term contract ends.

For migrant workers, this bondage to one employer without any real access to avenues of justice must end, for power also lies in countries of origin who can insist that no migrant worker is send back or made ‘undocumented’ (or illegal) when he has outstanding claims against his employer, and that during the pendency of such claims, migrant workers must be allowed to stay and work legally in that destination country. Sending countries can insist on employment contracts that ensure direct employment with the workplace. In fact, even for the protection of workers, maybe it is time for not just a recognition of the right to unionize but also an active encouragement by governments for workers to be able to form unions, not just at the workplace, but also nationally and even at the ASEAN level so that workers will have that necessary and available means to fight for better wages, better working conditions and related benefits at a more equal footing with MNCs and businesses. 

As with easing of the flow of trade and businesses across borders, so too should human persons especially human workers be given that freedom of movement especially across the borders of ASEAN member states, with the assurance of equal treatment and access to healthcare and social protections as local workers.

There are many UN, ILO, Regional and Multi-National bodies that have standards, declarations and conventions that address the question of human rights and worker rights, but sadly Member States, even when they breach them or do not meet their obligation are only visited with observations and recommendations – not with any punitive sanctions or actions. Likewise, the case with businesses owned by citizens of these states, or in the said states. Without the ability to be able to compel compliance, or even damages/compensation in the event of non-compliance by States and/or businesses, not just by member states, but also the said human persons or workers affected by reason of this non-compliance, it is very ineffective. Sadly, this is also the case with existing Code of Conducts and other Corporate Social Responsibility Instruments that bind some businesses and their supply chains, which are merely declarations of intent with no mechanisms for enforcement open to workers victimized.

It is time that workers are also protected, not just businesses, and are also given the required access and avenues to be able to pursue their rights and claims against not just businesses, but also governments that collaborated with business, to violate fundamental worker rights.

ASEAN governments need not follow blindly the flows of the river of neo-liberalism – it has the power and the capacity to change in favour of better protection of the rights, welfare and livelihood of each and every individual and their families. And, if the people in government are unwilling to move in this direction to ensure better equity, justice, rights and livelihood, then the responsibility falls on the people of ASEAN to bring about the necessary changes.

1-  Malaysia’s political economy and the international economic crisis – Tengku Razaleigh Hamzah,  ALIRAN Monthly 2012:Vol.32No. 2

2-  Malaysian government make about RM2 billion per year from levy. Employers of migrant workers are required to pay an annual levy for each worker whereby the rates depend on the sector employed in – manufacturing(RM1,200), construction(RM1,200), plantation (RM540), agriculture (RM360), domestic help (RM360),  services – welfare homes (RM600),  services – island resorts (RM1,200), services –others (RM1,800). – Migrants in Malaysia – An Overview by Charles Hector,  published in Praxis, the Chronicle of the Malaysian Bar, Jan-March 2012,.
3 - In Malaysia, employers need to buy insurance from certain companies under The Workmen's Compensation (Foreign Workers' Compensation Scheme) (Insurance) Order 1998, and now we have that new Foreign Workers Hospitalization and Surgical Insurance Scheme (RM120 per year), and in some sectors, it is the workers that have to pay for this new Insurance – not the employers. – Migrants in Malaysia – An Overview by Charles Hector, published first in Praxis, the Chronicle of the Malaysian Bar, Jan-March 2012

4 - “…Remittance flows are the second largest source of external funding for developing countries, and in Malaysian more and more companies are getting into this business, and now there are 62 and all over the country there are about 1,800 places where one can transfer money. The estimated total remittance was RM36.5bil in 2009 and recorded a further 12% increase in the first three quarters of 2010” – Migrants in Malaysia – An Overview by Charles Hector, published first in Praxis, the Chronicle of the Malaysian Bar, Jan-March 2012[Ref also to Remittance business picks up steam(Star, 19/2/2011)]

4 - Outsourcing agents/companies – workers work for the factory, factory pays about RM50 to the ‘outsourcing agent’ for normal hours of work, and agent pays worker RM20, making about RM30 per day just for normal work. If there is overtime and work on rest days, even more. If they have 1,000 such workers, they make RM30,000 per day, and in a 26 day month that is about RM780,000-00, and in a year that is about RM9.35 million. So, with about 2 million migrant workers, that is at least RM1.9 billion for just parasiting on workers sweat ant toil– Migrants in Malaysia – An Overview by Charles Hector, published first in Praxis, the Chronicle of the Malaysian Bar, Jan-March 2012


* This paper was presented at the Princess Maha Chakri Sirindhorn Anthropology Centre (SAC) Anthropology Conference entitled Envisioning the ASEAN Socio-Cultural Community: Culture, Conflict and Hope held at the SAC from 28th - 30th March 2012.Bangkok, Thailand

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