Government caps foreign worker EPF contribution at 2 per cent
Businesses win again.
Prime Minister Anwar Ibrahim has capped mandatory employer contributions to foreign worker EPF at a paltry TWO PER CENT. What a joke. The initial proposed quantum was 12 per cent, but employers (i.e. BUSINESSES) complained and it was subsequently reduced. The lofty professed aims of improving equity and closing the wage gap between local and foreign workers are not going to be met.
People think that we should not pay foreign workers as much as locals or give them the same benefits because this will encourage foreigners to “take our jobs.” This is incorrect.
Paying foreign workers a dignified salary with attendant benefits will in fact incentivise the hiring of locals as costs will be about the same or even cheaper since there are no recruitment fees (this is a whole other issue though) or accommodation costs. In fact, there’s literally no evidence of any link between the employment of migrant workers and the wages of Malaysians. This lousy EPF quantum means that migrant labour remains cheaper than Malaysian labour, contributing to the cycle of migrant labour exploitation and poor worker standards across the board.
Despite big reform promises this is not in keeping with international standards, particularly the twin principles of equal opportunity and equal treatment. If you get a top-up of RM2 a month while making an RM100 salary and the guy next to you gets RM12, is this fair and equal? If the government wants to even talk about international standards, maybe they should ratify relevant ILO instruments first. Don’t want right, cos know for sure malu (embarrassed).
At two per cent, I wonder about costs of collecting (administrative, compliance, processing)… I suppose there’s already the infra in place and expanding to foreign labour won’t require any system overhauls. If anyone smarter than me has thoughts on this, please reach out.
The Malaysian Employers Federation head has responded by saying that the EPF cap will provide substantial financial relief for businesses already struggling with the minimum wage increase. To quote a labour rights activist: what a crybaby. I’m still not sure why business owners think they should be able to maximise profits at the expense of people: it’s not like I can walk into a supermarket and get avocado for cheaper because I’m tight on cash that month. Things should cost what they cost, and the state-enabled devaluation of labour has been screwing us over as a nation for decades.