Halt Sabah Law Ordinance amendments, businesses struggling – associations

KOTA KINABALU (June 19): Six associations in Sabah are compelling the Sabah Government to put a halt to the Sabah Law Ordinance amendments incorporating the Housing Act together.

Sabah Employers Association (SEA) president Yap Cheen Boon said that failure to do so will cause a double whammy to Sabah’s already struggling businesses operating in an already weakened economy.

At the same time, they also urged the state government to take back the prerogative, either through the Ministry of Science, Technology and Innovation (KSTI) or another ministry and exercise the right to ownership of Sabah Labour Ordinance; and initiate consultation with all stakeholders on the two Acts, finalise on the technicalities and imbue the Acts with Sabah’s contexts.

“Publicise the action plan with the two Acts to align with Sabah’s circumstances. To pass or not to pass, and if so, separately to allow breathing space for Sabahan business employers,” he said at the joint press conference attended also by representatives from the Federation of Malaysian Manufacturers (Sabah Branch), Sabah Entrepreneurs Transformation, Kota Kinabalu Hardware, Machinery and Building Materials Traders Association, Sabah Timber Industry Association, Timber Association Sabah and Federation of Sabah Industries here on Wednesday.

Yap also urged the Sabah Government to kick start the Sabah Labour Advisory Council (SLAC) to include Sabah representatives from employers, employees and agencies following tripartite principle, to be chaired by the State Government.

“This will prevent the incident of no effective Sabah representatives sitting in the National Labour Advisory Council, or Minimum Wage Consultative Council, which are but lip service on tripartitle participation,” he said.

He added that it was pointless to have SLAC helmed by the Federal Human Resource Ministry when NLAC is already under its purview.

Earlier, Yap said that they were baffled that labour laws affecting businesses and workers in Sabah are put for Parliament approval and not state legislative approval.

“We are disturbed by the legislative procedure that seemed to have taken the prerogative out of Sabah and into the federal’s hands, and absence of the state government’s involvement throughout the whole process.

“For labour law that affects both businesses and workers within the State, and which should be under the state’s purview, taking a silent stand and letting federal agency to steer and dictate direction, and to put for Parliament approval instead of State legislative approval is baffling,” said Yap who claimed to represent a coalition of associations from multiple economic sectors within Sabah that were concerned with recent developments on labour legislative amendments affecting the State.

He reminded that Sabah is still recovering economically after the Covid crisis.

“Sabah is the only State that has experienced negative growth compared to pre-pandemic year of 2019. In other words, while it achieved 3.7 percent growth in 2022, the GDP (Gross Domestic Product) of the State in 2022 is still less than 2019’s,” he said.

He also mentioned that the number of business employers has declined from 2018’s 51,200 to 2022’s 34,905 companies; which means a staggering 32 percent of Sabah-based businesses had chosen to close shop within a four-year span,” he said.

With lesser business employers in operation, it is inevitable that demand for labour is hampered, resulting in Sabah having the country’s highest unemployment rate of 7.5 percent, he added.

“Amidst this lacklustre economic landscape, business employers are struggling to survive, and are now forced to grapple with major upcoming labour legislative changes that will see further detrimental impact on business costs,” Yap said.

Apart from the Occupational Health and Safety Act implemented on June 1, 2024, mandating licensed safety coordinator on all businesses (with over five employees), looming over the horizon are Sabah Labour Ordinance amendments, Housing Act 446, Minimum Wage and Progressive Wage Model, he said.

He added that they are dismayed to see the Sabah state government remaining passive on this crucial juncture of legislative changes right from the beginning.

“Industry and business representatives were called to an engagement session on SLO amendments in 2019, to provide feedback and comments. At that time many questions were left unanswered, with the assumption by attendees then that there would be follow up to update and discuss further. That was however the only engagement done.

“Next development was revealed during the federal Ministry of Human Resources Workers Day celebration in May 2024 (almost five years later) when it was made known that Sabah Labour Ordinance amendments were passed together with the Housing Act included in it (unlike Peninsular Malaysia being separated),” he said.

He added that this was followed by a discussion called by the Labour Department, a federal agency, in June 2024, to discuss technical details pertaining to Housing Act inside SLO amendments.

He claimed that the reason given was to get ready for impending Parliament approval.

“We are disturbed by the legislative procedure that seems to have taken the prerogative out of Sabah into federal’s hands, and absence of state government’s involvement throughout the whole process. For labour law that affects both businesses and workers within the state, and which should be under state’s purview, taking silent stand and letting federal agency to steer and dictate direction and to put for Parliament approval instead of State legislative approval is baffling,” he said.

Yap alleged that Sarawak has disallowed this to occur to them.

“We can attribute the passivity to the weakness of not having a dedicated human resource ministry to look after the State’s labour issues, despite many urges by industry and business sectors to do so. Without an effective human resource ministry, the state government will not be kept abreast of developments and take necessary measures; thereby falling into ignorance when the whole country is aligning with international labour convention,” he said.

“This is unfathomable when the State has the country’s second largest group of working population; over 1.9 million people (about 13% of total employed persons for Malaysia), a fact that seemed to have got lost unfortunately by the state government. Such glaring deficiency has been raised repeatedly but has not been redressed.”

He added that since early 2023, they have advocated setting up the Sabah Labour Advisory Council (SLAC) as a platform to study issues and formulate policies to suit Sabah’s context, and chaired by the state government, as a workaround to the State’s absence of a human resource ministry.

The talk of such a council has been going on for almost two years since our first proposal date, with promises of meeting to be convened by KSTI inexplicably pushed back several times, from January this year, to April, and now to July 2024. Despite the original intention for the council to be a state prerogative, we have since learned that it could now be placed under federal purview; a move that will no doubt see formulation of policies weighing more on federal-centric considerations than Sabah’s,” he said.