72% of Malaysian respondents against Employer Mandatory Commitment

The Federation of Malaysian Manufacturers (FMM) has announced its latest FMM-MIER Business Conditions Survey 2H2016 results on 2 March. Gathering 370 responses from FMM members, some key findings include:

• 72% against employer mandatory commitment (EMC)
• 20% are practising close to full automation
• 58% maintained workforce in 2H2016

Implementation of EMC

The survey revealed that the Malaysian government intends to implement the annual FOMEMA medical examination to reduce the risk of transmission of communicable diseases, on top of the EMC which includes employers bearing the levy burden, paying minimum wage and insurance for foreign workers (FW) amongst other requirements.

The results showed that most respondents (72%) voted against the EMC. Almost 45% said levy is currently borne by the FW, while 17% pay for their FW and another 17% share the burden with their FW. Almost three-quarters (74%) of respondents agree that the EMC will increase the cost of doing business; while close to half (48%) doubted that the desired objectives will be met. In fact, only 11% felt that the EMC will achieve its objectives.

On that note, 43% felt that the issues are more of illegal FW and weak enforcement. Additionally, some (40%) believed that this would cause locals to demand more benefits while 39% were concerned over discrimination of locals. Almost 3-in-10 opined that the EMC should be implemented in phases with a scheduled notification. Employers in Malaysia were made responsible for the levy of foreign workers under the EMC in Janaury 2017.

As for FOMENA, almost 6-in-10 respondents agreed to the annual medical examination, despite 55% citing this will add to their cost of doing business. Close to half (44%) believed that the objectives will be achieved, while 35% felt that illegal foreign workers and weak enforcement are the main problems.

Almost a third (33%) of respondents suggested that the medical examination be carried out only on the return of the FW from his/her home country while 26% opined that, as a multiplier effect, locals will demand more benefits.

ALSO READ: Malaysia government agrees to postpone new EMC foreign worker levy

Automation levels

Respondents were also asked to indicate their current level of automation in processes. One-third (about 34%) of respondents are automated at the 31-50% level, while a-fifth (20%) were at 51-100%; and almost 30% at 1-20%. The remaining 13% are 21-30% automated; with the final 3% not automated at all.

Looking into key areas of operations, findings show that mould/die change-over is the least automated process while information management is highly automated.

Employment slows down

Hiring at year-end in the manufacturing sector was less ambitious, with most putting hiring on hold. The current employment index remained positive at 104 albeit falling two points from 1H2016. 23% of respondents increased their headcount (a notch down compared to 1H2016’s 24%) with the majority (58%) maintained workforce in 2H2016, while 19% downsized.

The expected employment index is held somewhat steady at 110 compared to 111 in the previous survey. Results show that 6-in-10 respondents plan to keep hiring and retrenchment on hold for now.

Table / FMM

Photo / 123RF