Foreign workers to bear cost with minimum wage policy in place

  • Nation
  • Thursday, 31 Jan 2013

PUTRAJAYA: The Cabinet has agreed to reinstate a 1992 ruling putting the burden of levy on foreign workers instead of their employers.

The decision is to be enforced with immediate effect on new foreign workers and those wishing to renew their work pass, employment pass (pas panggajian), or temporary work visit pass.

The move is to reduce the hiring cost for employers, said Finance Minister II Datuk Seri Ahmad Husni Hanadzlah.

“The minimum wage, which came into force this year, has raised the salary for all workers on an average of between 30% and 50%, or from RM600-RM700 to RM900 a month.

“With its implementation, all workers, including foreigners, will get other benefits such as a higher amount of overtime pay, taking the overall income average to between RM1,200 and RM1,500 a month.

“The move to impose the levy on foreign workers will not be a burden to them as the levy paid is between RM34.16 and RM154.16 per month, compared with a general increase in salary of between RM300 and RM500 per month,” Ahmad Husni said in a statement yesterday.

The collection of levy for foreign workers was introduced in 1992 and was fully borne by the workers until 2009 when the Government decided to shift the burden to the employers.

The 2009 decision was to control a ballooning population of foreign workers in the country at the time.

Ahmad Husni said the Government had taken measures to tackle the problem through the 6P programme, which has led to a “more organised” management of foreign workers.

Employers have welcomed the move, saying the burden of paying levy should rest with the employees.

Malaysian Employers Federation executive director Shamsuddin Bardan said: “Levy is a form of tax imposed on individuals for using public facilities paid for by the taxpayers.

“The move will not only help employers but also assist the country in reducing the outflow of money, which can be used for development.

“The levy comes up to about RM2.1bil every year and when employers need not bear the cost anymore, it will translate into greater profits for employers.

“With greater profits come greater taxes.”

Meanwhile, the Malaysian Trades Union Congress said it objected to the move.

Its secretary-general Abdul Halim Mansor said MTUC was “greatly disappointed” that it was not consulted on the decision.

“This is a form of continued discrimination against foreign workers as the move serves only to reduce the burden of the employers.

“If the Government wants to reverse the (responsibility of paying) levy, they should take other measures to increase social security for foreign workers, such as making it compulsory for employers to make EPF (Employees Provident Fund) or Socso (Social Security Organisation) contributions for them,” Abdul Halim said.

Though welcoming the levy move, some local businesses such as KK Mart Group of Companies said it was only a “drop in the bucket”.

“We still have to pay for our foreign workers' accommodation, transport and food allowance.

“Are the workers going to absorb this as well?” its chairman Datuk Dr Douglas Chai asked.

He said his KK Mart franchise used to pay each foreign worker RM900 a month for 12-hour shifts.

With the minimum wage in place, each worker would have to be paid some RM1,406 a month.

With over 500 foreigners working for the group, this would come up to an additional RM250,000 a month.

Small business owners such as Margaret Chong, 55, who runs a laundry in Section 17 said that she did not want her workers paying the levy.

“I will pay. I want my workers to have peace of mind,” she said.

Related Story: MCA: Foreign workers must also bear other costs

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