In Malaysia, if an employer employs LOCAL worker, he has to pay that worker his WAGES plus and additional 11-13% to EPF/KWSP.
For foreign workers/migrant workers, he did not have to make any EPF/KWSP Contributions.
HENCE, cheaper monthly payment obligations for MIGRANT WORKERS - hence, it PREJUDICES LOCAL Malaysian workers.
Malaysian workers should be PRIORITIZED - so, the introduction of EPF for migrant workers is good.
Now, with regards to monthly wages and EPF contribution - it is EQUAL. Hopefully, this will make some employers to now employ MORE Local Workers.
From a principle of EQUALITY - it ends DISCRIMINATION amongst workers. For the mandatory employer contribution to workers is now the same.
SECOND - at least migrant workers will have SOME money to take back home when they leave Malaysia > that monies in the EPF accounts. This would overcome the problem of employer cheating workers of wages, and delaying in settling payments due to workers. BUT Now, with this lump sum money in the EPF account - they can go back. Previously, many remain 'illegally' as they do not have enough money to return because employer cheated them, etc..
Money owing to migrant workers, who are asked to leave the country at the end of the employment, is LOST because to claim for that monies PHYSICAL PRESENCE at the Labour Department was needed. Failure to attend results in your claim against employers being dismissed...a grave injustice to workers > yet to be resolved by the Malaysian Government. This is 'HUMAN TRAFFICKING" - and Malaysia, sadly by law and practice, facilitates Human Trafficking, being exploitation of workers. Employers('human traffickers') who do not pay workers for the work already done tend to get away with it.... Malaysia must resolve this issue.
People have asked that migrant workers be not sent back to their country of origin, until it is CONFIRMED that employers have already settled all payments due, and there is NO outstanding claim of monies from employers. A suggestion that a Ministry of Human Resource Certificate be a requirement - where the Ministry will investigate and ensure that there are NO MORE outstanding payment to these workers before they are asked to leave Malaysia..
It is disappointing the EMPLOYERS are protesting ...WHY? Equality demands that all workers are treated equally irrespective of their nationality.
MORE contribution to EPF also may benefit all EPF account holders - as more monies available means more investments..and thus the chance for HIGHER EPF Dividends annually...
FMM shocked by govt’s move to deduct EPF for migrant workers
The Federation of Malaysian Manufacturers says industry players feel sidelined as they were not consulted on mandatory EPF contributions for foreign workers.
FMM president Soh Thian Lai said it was caught off guard by the announcement when the 2025 budget was tabled last Friday, saying the government did not engage stakeholders prior to this.
Soh also lamented the lack of clarity on the plan, saying this has caused great concern within the business community.
“Industry players feel disappointed and sidelined, as they were not given the opportunity to provide input or voice their concerns on the potential impact of such a policy on business operations, costs and workforce management.
“Its implementation should be delayed, preferably for another two years, to allow sufficient time for comprehensive stakeholder consultations and for businesses to adjust to the impending financial commitments.
There has been no information on key aspects like the specific timeframe for implementation, who exactly would be covered under this rule, the contribution rates for both employers and foreign employees or how the phased rollout will be managed, he said in a statement.
Soh said the mandatory contributions for foreign workers would affect the operating costs and cash flow of employers, adding that this was an additional burden on top of the upcoming new RM1,700 minimum wage and multi-tier levy system.
He believed the existing social safety net system for migrant workers offered sufficient protection, while EPF’s purpose of retirement savings did not align with the short-term nature of the employment of migrant workers.
He also said employers could not afford to make EPF contributions for migrant workers at the same 12%-13% rate that they do for Malaysian employees.
With 2.5 million foreign workers in the country, the EPF contribution on non-citizens would translate to an additional minimum annual payroll cost of RM6.6 billion, he said, also citing the minimum wage and a 13% contribution rate as an example.
The former president of the National Chamber of Commerce and Industry of Malaysia added that migrant workers may not be keen about contributing to EPF since it would reduce their take-home pay, the bulk of which is sent to their families back home.
In announcing the budget last week, Prime Minister Anwar Ibrahim said the government had agreed to make it mandatory for foreign workers to contribute to EPF, adding this would be done in phases. - FMT, 21/10/2024
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