More strikes, cost hikes likely with TPP, study indicates

PwC said Putrajaya would have to amend its labour laws and regulations to fulfil its obligations under the TPP agreement. — Picture by Choo Choy May
PwC said Putrajaya would have to amend its labour laws and regulations to fulfil its obligations under the TPP agreement. — Picture by Choo Choy May

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KUALA LUMPUR, Dec 3 — Malaysian employers may face more industrial action by employees along with higher business costs if the country signs the Trans-Pacific Partnership (TPP), consultants PricewaterhouseCooper (PwC) said in its cost-benefit analysis released today.

PwC said Putrajaya would have to amend its labour laws and regulations to fulfil its obligations under the agreement, which would include relaxing the conditions imposed on trade unions that would effectively make it easier for them to go on strike or stop work as a sign of protest.

“Based on the applications for strikes to the Ministry of Human Resource (MOHR), there can potentially be an increase in the number of strikes if the requirements are relaxed,” the report said, referring to the 27 applications for strikes to the Malaysian government in the period of 1999 to 2014.

According to PwC, there were a total of eight reported strikes mostly in the manufacturing sector since 2008, while the MOHR has approved only three applications for strikes since 1999.

Out of the 27 applications, nine were withdrawn, four were resolved through negotiation, while seven were disallowed due to invalid ballots and one was considered an illegal strike. PwC said the eight cases in the two latter categories may be allowed if Malaysia introduces less stringent requirements to match TPP obligations.

To fulfil its TPP labour obligations, Malaysia would have to make various changes including allowing multiple unions in an organisation, allowing workers to be members of multiple unions even in those that are not of the same industry and allowing strikes to be held if consent of a simple majority of union members is obtained, instead of the current requirement for two-thirds majority.

“Most sectors, except the E&E and oil and gas sectors, expressed concerns that these measures could increase the risk of disruptions due to labour disputes, which would in turn increase labour costs and incur revenue and reputational losses,” Pwc said, noting that most firms in the electrical and electronics sector already conform to international labour rights standards and the oil and gas sector’s lower numbers of foreign workers reduces its risk of labour disruptions.

But PwC said that Malaysia would still be able to add on regulations or guidelines to help manage risk of disruptions, citing as example the requirements for adequate notice to be given and the protection of anonymity of votes before a legal strike is allowed.

“While enforcing the labour rights under the 1998 Declaration may seem to increase the cost of business, a joint study by the ILO and the World Trade Organisation (WTO) has found that there is little concrete evidence to support this view. Trade union density and collective bargaining are only one factor amongst many that can have influence on the economic performance,” it concluded.

PwC’s final report on the cost-benefit analysis of Malaysia joining the TPP is titled “Study on Potential Economic Impact of TPP on the Malaysian Economy and Selected Key Economic Sectors” and has been posted on the Ministry of International Trade and Industry’s website.

In a separate cost-benefit analysis report by the Institute of Strategic and International Studies (ISIS) Malaysia, it was noted among other things that Malaysia is obliged under the TPP to protect the welfare of workers, including allowing “free access to and from their workplace” and disallowing the withholding of their wages and passports.

“Malaysia will have better labour standards, which may consequently contribute to economic growth and poverty eradication in the long run,” the report said when commenting on the principle of elimination of forced labour that it said typically exploits the poor and traps them in a poverty cycle.

On October 5, Malaysia and 11 other nations — US, Australia, Brunei, Canada, Chile, Japan, Mexico, New Zealand, Peru, Singapore and Vietnam — concluded negotiations on the TPP.

Like the 11 other countries that have to get the public to buy-in on the free trade deal, Malaysia has yet to sign and ratify the TPP which will be tabled in Parliament for debate and approval.

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