Foreign workers to pay levy with immediate effect, says Cabinet

malaysianinsider

PUTRAJAYA Jan 30 — The Cabinet decided today that foreign workers should pay the levy instead of employers The Star Online reported tonight The news portal said the decision is to be enforced with immediate effect on new foreign workers as well as those renewing their work pass employment pass or temporary work visit pass The Star quoted Second Finance Minister Datuk Seri Ahmad Husni Hanadzlah as saying in a statement “The minimum wage which came into force this year has raised the salary for all workers on an average of between 30 per cent and 50 per cent or from RM600-RM700 per month to RM900 monthly “The Government’s move to impose a levy on foreign workers will not be a burden to them as the levy paid is between RM34 16 and RM154 16 per month as compared to a salary increase of between RM300 to RM500 per month ”.

MINIMUM WAGE: Get foreigners to pay their 

levies, not bosses

http://www.nst.com.my/nation/general/minimum-wage-get-foreigners-to-pay-their-levies-not-bosses-1.201016

THE Malaysian Employers Federation (MEF) would like to 

respond to the editorial "He ain't heavy, he's my brother"  (NST, Jan 10).

Having to deal with inflation following the implementation of national minimum wages is somewhat a forgone conclusion. You don't need a crystal ball to foresee the impending inflation.

However, while the minimum wages policy is supposed to alleviate the suffering of about 3.2 million private sector employees, the fact remains that more than two-thirds of them are actually foreign workers.

Be that as it may, MEF's concern does not exclusively pertain to the cost of recruiting foreign workers, which has undoubtedly increased significantly over the years.

MEF is, however, disturbed by the blatant discrimination brought upon local workers vis-à-vis their foreign counterparts as a result of the minimum wage policy.

By law, a minimum wage is defined to mean a basic wage, which is what both local and foreign workers take home at the end of each month.

Notwithstanding this, while local workers make a living on their basic wages and whatever overtime they are accorded, the foreign workers are provided additional benefits which their local counterparts do not enjoy.

Besides their minimum basic wages, foreign workers are also given free accommodation, water, electricity and transportation.

Furthermore, the high cost of levy -- which is a form of income tax for the foreign worker -- is currently being paid by employers and not the employees.

The rate of levy also increases by 10 per cent in the third year and 20 and 30 per cent in the fourth and fifth years of service respectively.

For example, in the manufacturing sector, employers are required to pay levy at the rate of RM1,250 for each new foreign worker and this escalates to RM1,625 in their fifth and final year of service.

Since April 2009, employers have paid RM2.5 billion per year in cost of levy, while the expected additional cost to employers to implement the national mini-mum wages policy for foreign workers is around RM8.4 billion annually.

These policies inadvertently give the impression that local workers will become more destitute than their foreign colleagues and, therefore, will need to continue to depend on government handouts in the long run.

Clearly, it costs more to recruit a foreigner than a local worker. To get rid of this double standard, MEF has proposed to the government that foreign workers be required to pay their own levy.

In the local context, the majority of employees pay their own income tax and only a few employees are given the privilege of having their employers pay their income tax.

MEF had also proposed that the cost of amenities be regarded as part of the national minimum wage to balance the treatment between local and foreign workers, as well as to cushion the impact of the sudden rise in costs on employers.

While employers have in principle agreed to the national minimum wage, let's make sure that there are no discrepancies, especially towards our Malaysian workers.

Certainly, employers are not in business to hand out subsidies to the masses. This should be the role of government.

Some employers have even suggested that the government devise a Skim Bantuan Majikan 1Malaysia to assist employers remain in business during challenging times.