The Worker's Right - It is the Employer's obligation in law to make a monthly contribution of 11-12% of total wages paid, to the WORKER - where the money is paid into the individual worker's EPF/KWSP account... The amount that workers have to pay their OWN is not the issue..
DISCRIMINATION happened, when the Employer had to pay this 11-12% monies, over and above the monthly wages received to workers, and this was clearly a WORKER's RIGHT - but there was discrimination in practice because MIGRANT workers(or foreign workers) have long been denied this right of workers. Although, they did the same work - they were DENIED the right to receive Employer's contribution into the EPF/KWSP account - which is ultimately the worker's own money...
Now, Prime Minister Anwar wants to LEGALIZE Discrimination against workers - by the enactment of a law requiring EMPLOYERS of Migrant Workers to just pay 2% of wages into the migrtant worker's EPF account... it should be the same as ALL workers in Malaysia, the employer of any worker should be required to constibute the SAME amount, i.e. 11-12% of the total wages received.
Extending EPF Mandatory Coverage to Non-Malaysian Workers for Fairness and Economic Competitiveness
The announcement to expand EPF mandatory coverage to non-Malaysian workers fully aligns with EPF’s broader effort to ensure that all workers, regardless of nationality, have access to social protection.Ahmad Zulqarnain said, “This initiative will promote greater fairness in the labour market by ensuring social protection for all workers, regardless of nationality, in line with international standards.”
Currently, non-Malaysian workers can voluntarily opt to contribute to the EPF. The new policy is expected to benefit over two million non-Malaysian workers in Malaysia.
The EPF will provide further updates on the details of contribution rates, key target groups and policy implementation mechanism in due course. - EPF/KWSP, 21/10/2024
The worker's right - is the EMPLOYER's contribution to this social protection scheme - Employees Provident Fund(EPF) which is an 'old age savings scheme' - for workers denied the right to receive post retirement pension until they DIE.
When, the announcement that foreign workers will be included, CONGRATULATIONS because finally foreign workers get to enjoy the right to receive - this 11-12% of their wages, over and above their wages, for their social protection.
NOW, in Malaysia
For Local Workers who earn a wage of RM1,700, Employers pay an additional RM204(12%) into the EPF account of the worker - for his 'old age savings', in lieu of a pension scheme.
For, the Migrant Worker, Employer just pays RM1,700.
Thus, the COST for employing a LOCAL WORKER is higher than a migrant worker - meaning for the employer, it was cheaper to hire a migrant worker. They save on not having to pay for this social protection scheme - hence, BAD for the Local Worker.
“If there are no EPF contributions for non-citizen workers, hiring them would be cheaper than employing locals...that is why this effort is important to prevent the imbalance and encourage local employment.- Finance Minister II Datuk Seri Amir Hamzah Azizan
If the Employer is also required to pay the same 12% in addition to wages for a Migrant Worker, it also benefits local workers - because monies that are paid into EPF accounts is invested to make profits - translate into higher dividends annually - simply MORE money to invest means higher profits..thus higher dividends.
BUT DISAPPOINTINGLY, Malaysia back-tracked and now want to LIMIT Employer's contribution to just 2% - this is clearly DISCRIMINATION of workers based on nationality - worse, Malaysia wants to LEGALIZE this Discrimination in LAW.
The government, on Feb 3, announced that the contribution rate for foreign workers would be set at two per cent for both employees and employers, lower than the mandatory rate for Malaysian workers and permanent residents, which stands at 11 per cent for employees and 12 or 13 per cent for employersDISCRIMINATION - in violation of Federal Constitution - Article 8(1) All persons are equal before the law and entitled to the equal protection of the law.
## The Federal Constitution guarantees equality to all PERSONS, not just citizens. Thus, it includes all workers in Malaysia, local and foreign.
EMPLOYMENT ACT prohibits discrimination - Section 69F (1) The Director General may inquire into and decide any dispute between an employee and his employer in respect of any matter relating to discrimination in employment, and the Director General may, pursuant to such decision, make an order.
Is this not discrimination, if employer pays 11-12% of wage value to EPF for LOCAL workers, and only 2% for foreign workers in Malaysia?
### section 60L (1) The
Director General may inquire into any complaint from a local employee
that he is being discriminated against in relation to a foreign
employee, or from a foreign employee that he is being discriminated
against in relation to a local employee, by his employer in respect of
the terms and conditions of his employment; and the Director General may
issue to the employer such directives as may be necessary or expedient
to resolve the matter. - this section was clearer about discrimination that happens to workers based on nationality - by an 2022 Amendment Act, that came into force in 1/1/2023. Did PM Anwar's government desire to allow discrimination based on nationality? In any even, despite this provision being deleted, it is still covered by new Section 69F
EPF Amendment Bill 2025 passed, mandates contributions for non-citizen workers
KUALA LUMPUR, March 6 — The Dewan Rakyat today passed the Employees Provident Fund (EPF) (Amendment) Bill 2025, aimed at enhancing social protection for both Malaysian and non-citizen workers in the labour market.
The bill was passed with a majority of votes in favour after being debated by eight members of Parliament from both the government and opposition blocs.
It involves amendments to 11 clauses to include provisions on the liability to pay contributions and the applicable contribution rate for non-citizen workers.
Earlier, Finance Minister II Datuk Seri Amir Hamzah Azizan, when winding up the debate on the bill, said making contributions compulsory for non-citizen workers would help increase the national salary structure, benefiting the people and the country.
“With this salary increase, households will have greater spending power, which will help drive national economic growth. Therefore, making social protection mandatory for non-citizen workers is in line with international best practices,” he said.
Amir Hamzah said it could also indirectly reduce reliance on non-citizen workers in the long run, enhancing the competitiveness of local businesses and encouraging a shift towards automation.
He cited the Low-Skilled Foreign Workers’ Distortion to the Economy (2018) Working Paper by Bank Negara Malaysia, which found that industry reliance on non-citizen workers was highly correlated with productivity levels.
“If there are no EPF contributions for non-citizen workers, hiring them would be cheaper than employing locals...that is why this effort is important to prevent the imbalance and encourage local employment.
“In addition, this measure can help the government reduce the number of undocumented non-citizen workers, as only those legally registered with employers are eligible to contribute to the EPF,” he said.
Amir Hamzah added that for non-citizen workers, mandatory contributions served as incentives that could be withdrawn upon returning to their country of origin after their work permit expired, with proof of employment termination.
He said non-citizen workers currently had the option to join the EPF scheme under the ‘once in, always in’ concept, with the contribution rate set at 11 per cent of their monthly wage for employees and RM5 for employers.
“As of December 2024, only 22,635 non-citizen workers, or 0.9 per cent of the 2.5 million, have opted to actively contribute to the EPF.
“The difference in the employer’s share of contributions also results in a lower wage cost for non-citizen workers compared to local workers,” he said.
According to Amir Hamzah, the proposal to make EPF contributions mandatory for non-citizen workers was expected to be implemented in the fourth quarter of 2025.
The government, on Feb 3, announced that the contribution rate for foreign workers would be set at two per cent for both employees and employers, lower than the mandatory rate for Malaysian workers and permanent residents, which stands at 11 per cent for employees and 12 or 13 per cent for employers. — Bernama, Malay Mail, 6/3/2025
Foreign labour EPF contributions may strain businesses
KUALA LUMPUR: The introduction of mandatory Employees Provident Fund (EPF) contributions for foreign workers in Malaysia would have significant implications for the economy and labour market, an expert said.
Universiti Malaysia Kelantan's Entrepreneurship and Business Faculty deputy vice-chancellor Professor Datuk Dr Nik Maheran Nik Muhammad said that while the move would provide better financial security for foreign workers, but it could also raise business costs, particularly in labour-intensive sectors.
"Employers might explore alternatives such as automation or shifting towards hiring local workers to offset these additional costs," she told the New Straits Times.
However, she cautioned that mandatory EPF contributions might reduce Malaysia's attractiveness to foreign workers compared to neighbouring countries like Singapore and Thailand, where such contributions may not be required.
"On the other hand, if foreign workers perceive EPF savings as a long-term benefit, it might encourage retention and workforce stability."
During the tabling of Budget 2025 in October, Prime Minister Datuk Seri Anwar Ibrahim announced that the government planned to make EPF contributions compulsory for all non-citizen workers, with both employees and employers required to contribute two per cent each.
He said the move aligned with the government's commitment to fair treatment for all workers, regardless of nationality, in accordance with international standards.
In November, Finance Minister II Datuk Seri Amir Hamzah Azizan stated that the policy aimed to improve wage equity and prevent local workers from being disadvantaged, as the government sought to narrow the wage gap between local and foreign workers.
Meanwhile, EPF chief executive officer Ahmad Zulqarnain Onn said that amendments to the Employees Provident Fund Act to enforce foreign worker contributions would be tabled in the Dewan Rakyat this week.
Nik Maheran said that industries heavily reliant on foreign labour, such as manufacturing, construction, and plantations, could experience higher operational costs, potentially leading to price hikes for consumers.
To mitigate these effects, she suggested that the government adopt a phased implementation approach, provide tax incentives, and invest in upskilling local workers to boost automation and workforce competitiveness.
"This policy could also encourage businesses to hire more local workers, leading to potential wage growth and improved job opportunities.
"However, if Malaysians remain reluctant to take on certain low-skilled jobs, businesses may still face labour shortages.
"Balancing these factors will be crucial in ensuring that the policy achieves its intended goals without disrupting Malaysia's economic competitiveness," she said. - NST, 3/3/2025
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