Policy trends and recommendations

Stronger academic capabilities bring forth better chances of finding quality jobs in the formal economy, as many within the informal economy in Malaysia have secondary school level education and below. However, possibly a more important point is that those who are better educated have a better grasp of worker rights and the importance of social security, and are in a better position to negotiate for fair treatment and decent work. The people’s empowerment that comes with knowledgeable citizens raises the bar for social security standards within the economy.

Civil freedoms and human rights

Civil freedoms is an enabling factor to strengthen social security provision because they allow civil society to act as watchdogs against worker exploitation and violations of human rights in general. The Human Rights Watch World Report 2015 reports a fairly restrictive space on civil freedoms of expression, association and assembly in Malaysia. Numerous laws have a chilling effect on free speech, such as Sedition Act 1948 which criminalizes the discussion of politically sensitive issues, and the Printing Press and Publications Act 1984 which enables the government to seize or revoke a printing press or publication license at wide discretion. Freedom of association and assembly are similarly limited. Organizations with more than seven members are required to register with the Registrar of Societies, which has absolute discretion on declaring any organization illegal; and while street protests have become more and more common with the Peaceful Assembly Act (2012), there have been cases of police assaults against protesters.

Restrictions on freedom of assembly, for instance on trade unions, have been criticized to have favored corporate and governmental interests to the detriment of workers.

In general, Malaysia does not have a strong record of protecting human rights. Within the same report of Human Rights Watch, it is noted that there is a pattern of police impunity and lack of accountability, leading to cases of police abuse and suspicious deaths in custody. There is no independent body to oversee these cases that has sufficient teeth to investigate and sanction abuses.

The Internal Security Act and the Emergency (Public Order and Prevention of Crime) Ordinance allow for detention without trial. These ensure that status quo within the system is maintained, and any political instability, even for championing human rights causes, will be quickly silenced.

Malaysia’s laws also do not recognize asylum seekers or refugees, and these populations do not have legal permission to work, hence forcing them underground.

monitoring and evaluation with a standardized targeting mechanism and database, with exit strategies geared towards productivity. This implies a reinforcement on the strategy of productive welfare, i.e., providing social assistance for the under-privileged and eventually channeling them into labor market programs. The discourse has not changed, and will continue for the foreseeable future, that the informal sector is an economic driver and will improve social well-being by increasing income. Social protection or social security in informal jobs are generally overlooked.

Social protection in Malaysia has been described as “demonstrating significant breadth of coverage, but lacks depth in terms of adequacy of provision and efficacy of administration”

(UNDP, 2014, p.152). The following policy recommendations are made in view of systemic problems that impede support for the informal economy, as opposed to sector-specific recommendations because sectors would require closer and deeper inspection in context and nuances.

Better data collection on the informal economy

There is need to define the informal economy and informal work in a broader sense, and to collect data on demographic and sectoral details on informal workers both within informal and formal sectors. Target recipients of social protection within the informal economy would include the self-employed and their enterprises/economic activities, informal wage workers and their employers, informal workers as a whole, and organizations or associations of informal workers.

The dataset should be designed with longitudinal data collection in mind to monitor the trend and progress of the informal economy. The quantitative data should also be supplemented by qualitative data collection that would paint a better context of opportunities and challenges faced by vulnerable groups in the informal economy.

Implementation of a holistic strategy on social protection provision for the informal economy There are no policies or plans that address the social protection needs of the informal economy directly. A strategy that is systemic in nature is therefore recommended for addressing the issue, including a long term implementation timeframe and quantifiable targets. The strategy should address both immediate social protection needs and longer term structural reforms that serve to eliminate risks for the informal economy. Related to the previous point on data collection, policy analysis should be conducted on vulnerable groups (such as what has been explored in this paper, though it should not be limited to those groups) to identify their needs on social insurance, social assistance, labor market programs; and these should be linked to the overarching vision of social protection for all. The outcome of the analysis will inform the implementation of the strategy, carried out by related ministries and departments but overseen by an overarching institution to streamline the actions and monitor the outcomes.

Removal of restrictions on unions and encourage collective bargaining by workers

According to Xavier (2008), the laws do not permit more than one national union in an industry, and the classification of what construes as an industry is the prerogative of the Registrar of Trade Unions. The Registrar of Trade Unions also holds wide discretion to deny registration (which has happened in the past). On the other hand, numbers of unionized workers are declining, as the perception of workers as surveyed by Rose et al. (2011, cited from Serrano, 2014) is that employers are highly opposed to unionization, and therefore refrain from unionizing. Unionization is an important mechanism for workers to self-organize and defend their own rights and demand for adequate social protection, based on their own needs. Therefore, restrictions on unions should be lifted, and collective bargaining by workers should be encouraged with the objective of raising the standards of decent work across the board.

Utilization of community-based social enterprises to champion social protection

Related to the previous point on workers championing their own rights is the idea of changing the nature of work itself. “Community-based social enterprises” are enterprises that should have the triple-bottom-line in general, i.e., have received multiple mentions within the 11MP, in raising the income of the poorest 40% of the economy, empowering the Bumiputera economic community, and providing social services. These social enterprises are envisaged to adopt the co-operative model, which is a legal structure that enables its members to make collective decisions for the organization. As they are community-based and aim for social impact, community-based social enterprises are a natural vehicle for spearheading decent work and better social protection. In 2013, there were 10,914 co-operatives in Malaysia and about 7.6 million people who were members of co-operatives (note that one person can be member of more than one co-operative). There is also the Co-operative College of Malaysia (CCM) that focuses on capacity-building for co-operatives. Mainstreaming of social protection for the informal economy can therefore go through CCM and existing co-operatives, which is to say that the organizations would embody the spirit of decent work and respect shared values of respect and fairness to workers, within and without the informal sector.

Provide better social protection within formal sector

Better social protection within the formal sector is not only important for informal workers within, but also important for norm-setting in general. For this, existing laws need to be continually updated to reflect current challenges and concerns for social protection. Triangular employment relationships should be reconsidered, and enforcement of social security contributions of employers should be stricter, so that workers’ rights are protected. Besides labor laws, delivery of social services should also be improved. This is covered within the 11MP, as the document acknowledges that there are gaps in implementation of social assistance for instance, such as overlaps in governmental functions in serving the poor. For example, multiple databases

exist for registration of the poor and underprivileged, and different agencies have systems that are not compatible thus data cannot be shared. If the social protection system can be streamlined and leakages minimized, more resources can be available for those who need them.

Extension of social protection to informal sector

The extension of social protection to the informal sector would include efforts to formalize the sector, by reducing barriers to formalization. This might include the cutting down of paperwork, more personnel to assist the processing of registration, and wider outreach on the ground to spread the awareness of the benefits of being part of the formal sector. It is also possible to emulate other economies such as Japan, India and Portugal to bypass the formalization process, and extend state protections to informal workers directly (see Chen et al., 2001).