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Trade unions in Malaysia: perspectives of employers & employees of unionized companies.

Trade Unions in Malaysia

Trade unions have traditionally been regarded as important instruments for protecting workers' interests at workplace. However, the decline in union density worldwide in recent times seems to signify a weakening of their influence (Aminuddin 2008, Bramble 2001, Benson & Zhu 2008, Heery 2002). Membership decline, structural changes in employment, management practices, membership participation and democracy, the legislative framework, and the political influence of unions have been under scrutiny in the developed countries (Waddington & Whitson 1993). In addition, trade unions are confronted by economic factors, generally beyond their control, such as threat of capital flight, and overseas competition. The Malaysian trade union movement is in such a predicament and it can be argued that the movement is faced with a number of challenges from changing labour market structure and neo-liberal policies. Todd and Peetz (2001) argue that overall Malaysia's industrial relations remain firmly within the 'control' rather than the 'commitment' framework. The state interventions remains pervasive, managerial control in the workplace continues to dominate and labour's ability to bargain collectively remains restricted. The provisions in legislations such as the Trade Unions Act 1959 and the Industrial Relations Act 1967 have made it very difficult for workers to organise themselves.

Industrial relations practices (including employment practices) in Malaysia have changed and continue to evolve since the general unionism from the 1920s to the defeat of the Communist trade union movement in 1947-48, and industrial unionism from 1948 until the eighties--when it now faces the prospect of being replaced by enterprise unionism. Various amendments to the legislation linked to employment and industrial relations, and industrialization strategies since the post-Independence years (1957 and beyond) have had a marked effect upon the activities of the employers and the trade unions. This has necessitated a careful examination of the extent of change in industrial relations in Malaysia. Attention has focused on two areas: first, the decline in the strength of organised labour as evidenced by a variety of statistics and second, the driving forces for this change.

Trade union density in Malaysia was 9.35% in 1990 (Ministry of Human Resources 1991), dropped to 9.24% in 1995 and 7.87% in 2000 (Department of Trade Union Affairs 2003, Department of Statistics 2006). Despite a slight increase to 8.5% in 2002, density has seen an overall decline in the subsequent years, to 7.7% in 2006 and to 7.45 per cent in 2008. Average membership per trade union dipped from 1,401.3 in 1995 to 1,317.4 a decade later. The slide in the average members per union continued from 1,296 in 2006, to 1,248.9 in 2008. While absolute union membership has continued to increase over the years, the average membership per union has continued to decline, which points to the trade union movement having many unions with small membership size. One would wonder at this point whether trade unions are a necessary institution. Josey (1958: 89) concluded that "without strong trade unions, Malaya is almost certain either to go communist or else degenerate into some form of authoritarianism". Even if one does not agree entirely with Josey's views, short span of history has indeed shown that trade unions have played an important role in industrial harmony. However, questions have been raised, ever so often, on their relevance by employers as the literature have revealed.

There have been research works on the Malaysian labour movement (e.g. Anantaraman 1997, Arudsothy 1988, Bhopal 2001, Jomo 1995, Kuruvilla 1995, Parasuraman 2004), but most of the studies have taken on a qualitative approach, with limited primary research to support the assertions. Empirical studies on the Malaysian trade unions, and in particular the perceptions of employers in unionised companies are lacking despite its importance to current debate on trade unionisation. Thus we examined the problems and issues, and reasons for the decline in trade unions movement in Peninsular Malaysia.

Debate on Trade Unionism

According to Hyman (1989:12), employers create internal mechanisms for the purpose of challenging workers' collective identification with unions. Fewer employers consider the need to use union to mediate their dealings with employees, reflecting an antipathy to unions (Gilbert 1993). Similarly, Kelly (1996) argued that there is a growing readiness on the part of employers to bypass trade unions and reduce the range of issues over which they have influence. Gall and McKay (2001) suggests that employers may use suppression strategy or the substitution strategy to make the organisation union-free. Employers using the suppression strategy create an atmosphere of fear and through intimidation they aim to sabotage or put an end to existing or expected attempts at union organisation and requests for union recognition or at the least, prevent unions from getting to a critical mass. Actions such as sackings, dismissals and redundancies seek to try to prevent or stop union office bearers from being active in dealing with members' concerns, organising meetings, producing publicity material and recruiting new members. The substitution strategy, on the other hand, seeks to make the organisation 'an issue-free company'. The employer attempts to convince workers that the union is redundant, and that there are no contentious issues, and even if these should arise they can be easily resolved to the satisfaction of both the parties. In doing so, the employer is being seen to resolve grievances. Employers also attempt to establish 'independent' and non-union related mechanisms for resolving grievances and giving expression to employees 'voice' (Gall & McKay 2001).

In Malaysia, Aminuddin (2003) and Ramasamy and Rowley (2008) declare that employer opposition to unionisation is common and the state is reluctant to challenge such opposition. They explain that employers' tactics have included indefinitely delaying union recognition applications, victimising or promoting activists to remove them from the shop-floor and forming company-sponsored in-house unions. The problem of union recognition, or rather the lack of it, by employers has been a long-standing one, with unionists accusing employers of intentionally delaying recognition of unions while using allegedly unfair practices to dampen unionism in the workplace (The Star 1996). Sometimes, employers delay union recognition by challenging the right of particular unions to represent their employees. Such delays undermine the unions' standing and effectiveness; having recruited the members, they remain unable to represent them until accorded official recognition. The sustained opposition of many employers to unions continues to undercut trade unionism in Malaysia, argue Jomo and Todd (1994: 35). Union recognition, according to Gall and McKay (2001: 94), "is a highly sensitive issue because it provides the potential for collective organisation to infringe upon managerial prerogative in order to defend and advance workers' terms and conditions of employment". They add that union recognition is particularly relevant where managerial values are increasingly becoming 'non-union'.

Many employers ignore workers' interest and practice a biased personnel policy and in doing so be inclined to breach the labour laws (Aminuddin 2003). Dependency theory argues that multinational companies in search of low labour costs and weak labour organisation lead to the suppression of trade unionism owing to the dependent states' relative powerless vis-a-vis multinationals. This situation is reinforced by inter-state competition to provide an attractive site for inward investments (Bhopal 2001). In the development decades of Malaysia, the state's accommodation of multinational, particularly antiunion, American corporations has further exposed the implications of state dependency, adds Bhopal (2001). Management generally does not welcome the interventions that unions impose on decision-making discretion and authority.

The presence of labour unions in the workplace has both good and bad points as far as business and society are concerned. Union leaders often accuse corporate heads and management of overemphasising profits, return on equity and earnings per share at the expense of the welfare and dignity of employees. Those on the management side believe that unions are bent on destroying free competition and enterprise. Neither statement is entirely accurate, although both contain some element of truth (Leap 1995). Savant (1990: 12) emphasised that "closures, sickness, lockouts and layoffs are more on account of mismanagement, internal disputes of the management, unhealthy competition and questionable practices indulged in by the management". According to Rajasekaran (2002), the Secretary General of MTUC, there are increasing anti-union activities by major corporations. They are demanding for the removal of legal safeguards that provide employment security to workers on the ground that removal of these safeguards is essential to face the increasing global competition. There is also mounting pressure on the government to weaken collective bargaining on wages and working conditions, to limit wage adjustments, to remove the tradition of paying annual bonus and to legalise discriminatory practices against foreign workers. Workers have to be protected from unscrupulous employers, states Aminuddin (2003). As such, trade unions have to play their role effectively.

There is evidence of some employers, particularly amongst the larger companies, introducing more modern management techniques in Malaysian workplaces. These include new methods of work organisation, inventory management and quality control. Multi-skilling is more prevalent and the working week is made more flexible to match the needs of production (Todd, Lansbury & Davis 2004). Kuruvilla and Erickson (2002) argue that as product markets became more globalised, the threat of communism weakened, and radical unions and parties declined, labour peace became less of a priority. At the same time, increased international product market competition has made cost reduction on the shop-floor imperative. Such cost reductions often involved increased use flexible approaches such as layoffs, temporary workers and sub-contractors. The focus is on the efficient deployment of labour, that is, reduced wage and non-wage costs. Employers see trade unions as barriers to efforts at restructuring their workforce. Lower unionisation, in line with the flexibility thesis (McGregor & Sproull 1992), becomes a strategic thrust of employers.

Research Methodology

The survey sample was drawn from the Malaysian Trade Union Congress (MTUC) and Malaysian Employers Federation (MEF) membership databases and included the employees (non-union members) and employers (represented by the human resource or the industrial relations/employee relations managers, or their representatives) at each workplace across different industrial sectors, namely: agriculture, transport and storage, wholesaling and retailing, hotels and restaurants, manufacturing, telecommunications, finance and insurance, and health. The primary data was obtained through surveys using self-administered questionnaires derived from a few notable research instruments (Tolich & Harcourt 1999, Bryson 2003, Office of the Employment Advocate 2004, Poole et al 2005).

After piloting the survey instruments with appropriate amendment, 576 questionnaires were mailed to selected respondents (non-union members) with 168 useable returns after several follow-up contacts of non-respondents. The survey was completed between August and October 2009. The responses from selected employers were collected during the MEF's regional meetings. Nevertheless not all selected respondents returned the questionnaires on the same day, and thus it was necessary to follow up with telephone calls to the respective employers, to seek their cooperation in filling up the questionnaire and have them returned early. A total of 215 questionnaires were distributed to the employers, of which 185 useable returns were received from a wide geographical area. The user-friendly SPSS software Version 15 was used to analyse the survey data, to arrive at appropriate conclusions.

Perceptions on Malaysian Trade Unions

Table 1 reveals the employers' attitudes towards the trade unions, as perceived by employees in unionised companies. Only 23.2% of the respondents agreed that employers provide access to unions, to talk to new employees. A small percentage of respondents perceived that employers do not discriminate against union members in career progression. On whether the employer is willing to negotiate with the union, 44% of the respondents disagreed that this is so. While only 14.9% agreed that employers display a positive attitude towards the union, 56.5% of the respondents were not sure whether their employers being negative towards their union. A substantial number of respondents (67.3%) disagreed that employers provide information about unions automatically to new employees. Finally, 85.7% of respondents disagreed that employers encourage all eligible new employees to join the unions, reinforcing the argument that respondents perceive employers to have rather negative attitude towards the unions. The role of the individual rather than the collective aspirations of employees is clearly emphasised by employers. Not only could it be argued that elements of individualisation are present and increasing, but employers are placing much emphasis on direct links between management and employees.

The main reason cited by employers of unionised companies for their acceptance of unionisation is that they 'have to comply with relevant legal provisions on rights of workers to form unions' (84.3%). Section 4 of the Industrial Relations Act 1967 of Malaysia aims to protect the rights of workmen as well as employers, in the private sector, to form and assist in the formation of their respective trade unions and in the exercise of their rights, no person can interfere with, restrain or coerce a workman or an employer. It appears to be the case of unwilling acceptance, that is, failure to comply would mean having to face possible legal action either by the union or the government. Some employers also stated that it was usual in their industry (22.7%) and concerns about union disruption have also played a role in the acceptance of unionisation (23.8%). Employers largely disagree that they would prefer to negotiate wages and conditions collectively. Further, neither the employers' associations recommend it nor do their customers require it. Table 2 reports the results of the survey.

It can be noticed from Table 3 that the employers acknowledge the involvement of trade unions and employee representative bodies in workplace issues, although varied in their extent of involvement. Unions are perceived to be involved in issues concerning company rules and regulations (35.1%) and female workers' issues (34%) to some extent. In critical areas of the organisation such as quality (21.1%), production (24.3%) and working practices (26.5%), unions appear to play a lesser role. Employers perceived the unions' involvement rather low in matters related to team work (17.3%) and issues pertaining to disabled workers (14.1%). These do not appear to be key issues among unions, and as such employers do not see unions as being active partners in some key areas of their companies' operations. In a few instances, the extent of agreement among employers about the involvement of both the trade unions and employee representative groups is high and this is considering the fact that employers do not generally see unions in a positive light. It would appear as if employers attempt to harness unions' involvement, in ways beneficial to their companies, for example, social and sporting activities (53.5%), employee welfare (49.7%) and cultural and religious activities (30.8%). Further, unions' involvement in health and safety issues (62.7%) is an indicator that employers see a role for unions in their organisations. Unions' involvement in the traditional bread-and-butter issue, that is, pay and benefits is not very high (50.3%). Therefore, unions are perceived as being more involved in social matters, rather than the more critical 'quality' and 'production' issues. The aim of employee involvement initiatives is to displace the conflict-based collective bargaining approach with approaches that do not involve unions.

Employers believe that their attempts at introducing employee involvement and participation initiatives have, for example, induced a high sense of belonging (73.5%), improved communication (69.2%), enhanced performance (68.1%), achieved greater commitment (63.2%) and increased overall profitability (62.2%). Indeed the employers perceived positively all items pertaining to employee involvement and participation initiatives as indicated in Table 4.

Based on the analysis, employers appear to have adopted workplace policies in which they believe that employee involvement and participation initiatives have an important part to play. However employers agree that the two most important barriers to successful operation of employee involvement and participation are employees' resistance to change and their level of education and training. To a smaller extent, employers also perceive that employee representative bodies are possible barriers to employee involvement and participation. Employers perceived that the low level of support provided by the trade unions as being the other important sources of barriers (56.7%). This could partly explain employers' antagonistic approach towards unions in Malaysia. Employers perceived that top management support and employee rewards systems as being of very minimal barriers to employee involvement. Table 5 reports the barriers to employee involvement and participation as perceived by the employers.


A substantial majority of non-union members perceive that employers do not display a positive attitude towards the union, reinforcing the previous findings that employers have rather negative attitude towards the unions. Unions are generally perceived by employers of unionised companies, as being able to contribute very little to their businesses. In effect, employers not only hold the view that unions are superfluous, but possibly also a threat to their business. The high level of employer opposition to unionisation in this study is clearly an indicator of its role in the erosion of collective representation, leading to the diminution of union organising efforts. Based on this study, it can be argued that the highly competitive and dynamic globalised business environment has been the key driver in employers' attitudes towards trade unions. The employer, who has direct and immediate contact with employees and trade unions can, therefore, be viewed as a significant barrier to trade unionism. It is evident that the employers favour the unitarist approach, rather than the pluralist approach. While the labour practices are focused on employee involvement initiatives, the employer relationship with trade unions is the one that can be seen as somewhat antagonistic. One of the reasons for this is the drive for organisational stability and harmony in a business environment that is highly competitive, especially competition from low cost economies such as China and Vietnam.

The relationship between the employers and trade unions is one built on power imbalance and suspicions about each other's roles. The capacity of employers to resist an effective union presence at their workplaces has therefore made union membership unavailable to large numbers of potential union members. The findings suggest that unions will struggle to unionise in the face of concerted employer opposition. It would appear that unions are not being taken very seriously by employers. The full scope of employer opposition to trade unionism in Malaysia is difficult to observe, until further research on a longer term is carried out. Longitudinal research on managers in industrial relations is rare, and this is important.

Trade unions need to review their organising strategies, as well as their internal procedures and processes. Trade unions should go beyond purely being involved in their own activities, and be engaged in activities strategic to their communities and their employers. Employers need to implement work practices that accommodate legitimate workers' interests, and the union's legitimate interests, as well. There are employers who are unethical and unscrupulous when it comes to worker issues. As such, unions are important, and in fact necessary, to protect workers' interest. Trade unions can be partners, supporting the employers' business, rather than merely being seen as by employers, as the opposition. Unions have a vested interest in the existence and growth of the businesses: it serves their very existence. Union busting activities may not be the appropriate approach; instead employers can consider proactive and caring employment policies. There is a need to articulate a vision that seeks to engage both unions and employers in an intelligent discourse. There is a need for a reformulation of how trade unions can be represented in the workplace and at the national level. Instead of taking the traditional adversarial approach, a partnership approach may be the best way forward.

The state, with its neo-liberal policies has, over the years, strengthened legislation to curb the powers of trade unions. This has led to a situation where unions find it difficult to express the disappointments and expectations of workers. Unions, on the other hand, have to reassess their strategies, in terms of their relationship with employees and employers. The research findings contribute to better understanding of workplace issues among the various stakeholders, namely employees, employers and trade unionists, and to some extent, to the state as well. The results have potential benefits in that it brings into the open the views of the different parties about each other, the positive elements as well as the problems and frustrations. Understanding the viewpoints of others may commit each other to a long term harmonious workplace. It should be emphasised that these findings should be further investigated on a longitudinal basis, to better understand the changing nature of the business environment and its implications on trade unionism, in particular.


This paper draws on the workplace industrial relations survey financed (under the Fundamental Research Grant Scheme, 2008-2010) by the Ministry of Higher Education, Malaysia.


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Raduan Che Rose & Naresh Kumar are from the Faculty of Economics & Management, Universiti Putra Malaysia. E-mail: Nagiah Ramasamy is from the Sunway University College, Malaysia
Table 1 Employer s Attitude towards the
Trade Union as Perceived by Employees

Items                            Non-union Members in Unionised Company
                                 (n = 168)

                                 Disagree (%)  Neutral (%)  Agree (%)

Provide access to union to talk   89 (53.0)     40 (23.8)   39 (23.2)
to new employees

Does not discriminate against     36 (21.4)    104 (61.9)   28 (16.7)
union members in career

Willingly negotiates with the     74 (44.0)     67 (39.9)   27 (16.1)

Managers display a positive       48 (28.6)     95 (56.5)   25 (14.9)
attitude towards the union

Information about union          113 (67.3)     33 (19.6)   22 (13.1)
automatically given to new

No discrimination in hiring       49 (29.2)    103 (61.3)   16 (9.5)
ex-union members

All eligible new employees are   144 (85.7)     21 (12.5)    3 (1.8)
encouraged to join union

Table 2 Reasons for Company s Acceptance of Unionisation

Items                             Employers in Unionised Company
                                  (n = 185)

                                  Disagree (%)  Neutral (%)  Agree (%)

We have to comply with relevant     4 (2.2)     25 (13.5)    156 (84.3)
legal provisions on rights of
workers to form unions

We are concerned about workers     53 (28.6)    88 (47.6)     44 (23.8)
disruption if we do not comply
with it

It is usual in our industry        86 (46.5)    57 (30.8)     42 (22.7)

We prefer to negotiate wages and  130 (70.3)    42 (22.7)     13 (7.0)
conditions collectively, not

Our Industry Association          176 (95.1)     9 (4.9)       0
recommends it

Our customers/clients require it  185 (100.0)    0             0

Table 3 Employers Perception on the Involvement of Trade Unions

Items                             Employers in Unionised Company
                                  (n = 185)

                                     Low (%)   Neutral (%)     High (%)

Production issues                 108 (58.4)     32 (17.3)    45 (24.3)
Quality issues                    111 (60.0)     35 (18.9)    39 (21.1)
Team working issues                90 (48.7)     63 (34.1)    32 (17.3)
Health and safety issues           26 (14.1)     43 (23.2)   116 (62.7)
Pay and benefits issues            44 (23.8)     48 (25.9)    93 (50.3)
Working practices                 108 (58.4)     28 (15.1)    49 (26.5)
Company's rules and regulations   105 (56.8)      15 (8.1)    65 (35.1)
Interests of female employees      32 (17.3)     90 (48.7)    63 (34.0)
Interests of disabled employees    88 (47.6)     71 (38.4)    26 (14.1)
Cultural and religion activities   86 (46.5)     42 (22.7)    57 (30.8)
Employee welfare system            55 (29.7)     38 (20.5)    92 (49.7)
Social and sporting activities     41 (22.2)     45 (24.3)    99 (53.5)

Table 4 Employers Perception on the Extent of Contribution
of Employee Involvement and Participation Initiatives

Items                         Non-union Members in Unionised
                              Company (n = 168)

                              Disagree (%)  Neutral (%)  Agree (%)

Induced sense of belonging     7 (3.8)      42 (22.7)    136 (73.5)
Improved communication        30 (16.2)     27 (14.6)    128 (69.2)
Enhanced performance          32 (17.3)     27 (14.6)    126 (68.1)
Identified untapped talent    31 (16.8)     37 (20.0)    117 (63.2)
Achieved greater commitment   23 (12.4)     45 (24.3)    117 (63.2)
Reduced industrial dispute/   35 (18.9)     34 (18.4)    116 (62.7)
created harmony
Increased overall             33 (17.8)     37 (20.0)    115 (62.2)
Reduced absenteeism rate      26 (14.0)     54 (29.2)    105 (56.7)
Reduced turnover rate         32 (17.3)     51 (27.6)    102 (55.2)

Table 5 Employers Perception on the Extent of Contribution
of Employee Involvement and Participation Initiatives

Items                                     Employers in Unionised
                                              Company (n=185)

                                   Disagree (%)  Neutral (%)  Agree (%)

Employee education/training level   30 (16.2)    27 (14.6)    128 (69.2)
Employee resistance to change       32 (17.3)    27 (14.6)    126 (68.1)
Trade unions                        26 (14.0)    54 (29.2)    105 (56.7)
Employee representative bodies      90 (48.6)    34 (18.4)     61 (32.9)
Employee turnover rate             102 (55.2)    32 (17.3)     51 (27.6)
Employee absenteeism rate           97 (52.4)    54 (29.2)     34 (18.4)
Top management support             136 (73.5)    18 (9.7)      31 (16.8)
Employee reward systems            128 (69.2)    27 (14.6)     30 (16.2)
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Author:Rose, Raduan Che; Kumar, Naresh; Ramasamy, Nagiah
Publication:Indian Journal of Industrial Relations
Geographic Code:9MALA
Date:Jan 1, 2011
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