In the past 130 years, the number of foreign migrant workers in Malaya has grown from about 84,000 in 1880 to more than three million in 2010. Originally, foreign workers were predominantly from China and India and most were locked into semi-permanent “labour circulation” arrangements through their employment contracts.
Currently, foreign workers originate from a range of South and Southeast Asian countries, and Indonesians dominate labour flows. These workers migrate to Malaysia because they and their governments believe that temporary labour migration is a pathway to development. Predictably, most have also become trapped in circulating contract labour regimes.
The debate on the developmental impacts of migration meanwhile continues to exclude discussion on the risks involved and the longer-term consequences of temporary migration. There is no conversation either on integration of earlier cohorts of migrant workers in society, let alone recent migrant workers who are increasingly referred to as aliens. The outlook is particularly gloomy for Malaysia’s marginalised South Indian plantation workers who became “orphans of empire” when hardliners in the ruling United Malays National Organisation legislated to deny them citizenship rights.
Commodities of empire, 1880s – 1970s
Britain’s ‘forward movement’ in Malaya after the 1870s resulted in the country’s greater integration into the international economy and facilitated the production of mineral and agricultural commodities. Concurrently, labour migration became a fundamental component of Malaya’s economic growth model and related social structures.
Malaya’s main’s commodity exports were tin, coffee and sugar. Chinese entrepreneurs monopolised tin production, recruiting workers from China for their mines. European planters were chiefly involved in coffee and sugar cultivation and they relied on indentured labour from India for their enterprises.
In the early 20th century, the planters switched to rubber and it subsequently became the main agricultural commodity. However, they lacked the capital to establish large properties and British trading (agency) houses in Singapore consequently played a vital role in bringing together planters and overseas financial interests (mainly in Britain), to convert the estates into joint-stock companies through flotation on the stock market in London.
The 1909-10 rubber boom led to further changes and the proprietary estates largely disappeared, with their former owners often taking up shares in the new corporate entities as part of the sale price. These events foreshadowed major changes in the industry since rubber production necessitated the development of a distinctive agricultural ‘complex’ with inter-connected operations and a particular cultural milieu. Moreover, the development of the rubber industry reinforced the connections between Indian labour mobility and capital and both the Indian and Malayan colonial administrations strategically planned and organised Indian labour migration to Malaya.
The plantation production system effectively established the Indian workers’ subsequent employment circumstances and contributed to their marginalisation in Malaysia. The plantation system has since continued into the 21st century and has been adapted for oil palm production.
Analogous to colonial frameworks, the Malaysian government and labour-sending states presently organise inter-state labour mobility. Additionally, since the 1980s Indonesian and Bangladeshi migrant workers have mostly replaced the former Indian workforce on plantations. These new migrant workers face a similar marginalisation progression. This paper compares past and present plantation labour regimes in Malaysia and frames the subject in the broader context of the plantation complex to suggest the larger, wider significance of the plantation management system and its institutional frameworks.
Indian workers and rubber
The rubber production system that was developed in Malaya was centred on cultivation of a single crop– rubber; an imported workforce mainly from India; and capital for the enterprise came from Britain, the United States and Europe. By 1910, rubber plantations covered approximately 225 000 hectares, rising to 891 000 hectares in 1921. This accounted for 53 per cent of the total land under rubber in South and Southeast Asia; and Malayan rubber exports also rose from 6500 to 204 000 tonnes between 1910 and 1919.
As stated previously, rubber cultivation necessitated recruitment of a large, cheap and “disciplined” workforce that had be settled and organised to work under pioneering conditions in the country.
British India with its teeming poverty-stricken millions and caste-ridden society was the preferred provider for this labour. The state and planters (as employers) essentially regarded the Indian labourer headed for Malaya as another tradable commodity in the production cycle. All the essential arrangements for his sojourn abroad – recruitment, transport and employment – were made by four parties: the sub-imperial Indian Government (or India Office); the Colonial Office in London; the Malayan (Straits Settlements and Federated Malay States) Government; and the employers.
Since most Indian emigrants lacked the funds for spontaneous mass migration, Indian labour recruitment was managed by the India Office and sponsored by the Malayan administration. Governance arrangements for the plantation labour regime rested on two pillars – the mobilisation of a largely migrant labour force that facilitated the use of economic and extra-economic measures to maintain low wage bills; and an ethnic (and gender) differentiation of the labour force that enabled the manipulation of both workers and wages.
Kangani
Private labour brokers/intermediaries were entrusted with the important task of facilitating and driving labour migration under the auspices of two recruitment methods – the indenture system and its variant, the kangani system.
The indenture recruitment method authorised employers to utilise enforceable, written labour contracts. Malayan planters either engaged the services of one of the labour recruitment firms in Nagapattinam or Madras, or sent their own agents to south India to recruit labourers directly. The agents advanced money to individuals wanting to migrate to Malaya, the advance being conditional on the intending migrants signing a contract on arrival in the country. The migrants were then considered to be under indenture to their employers for a fixed period, varying from three to five years (reduced to three years after 1904).
Subsequently, rubber planters started utilising their trusted workers as labour brokers to recruit Indian labour, thus introducing a chain migration outcome based on specific recruitment areas in south India.
This system, known as the kangani recruitment system, was primarily a personal or informal recruitment system and it became the preferred recruitment method after 1910. The kangani also provided the vital connection between poverty stricken rural south India and the frontier regions of Malaya, and enabled Indian migration to take place.
Moreover, planters favoured this method since the prospect of workers absconding became less likely, especially since the kangani had a vested interest in ensuring that the labourers did not abscond.
Growing demand for labour and the Colonial Administration’s own labour needs for public works projects led to a turning point in Indian labour recruitment in 1907. The Malayan Administration approved the Tamil Immigration Fund Ordinance 1907, establishing an Indian Immigration Committee (IIC) to manage a fund, later known as the Tamil Immigration Fund.
This legislation was important for three reasons. First the British established a state-controlled structure to handle the mass recruitment of “free” South Indian labour. Second, the Tamil Immigration Fund (renamed the Indian Immigration Fund in 1910) was set up to provide free passage for Indian labourers intending to come to Malaya.
The recruiting of workers for plantations continued to be undertaken by licensed kangani with the approval of individual planters. Third, all employers of Indian labour were charged a quarterly charge to cover the travel and related costs of Indian labour immigrants to Malaya. The levy was based on each “man-day” worked and amounted to about M$ 29.39 per head in 1912.
The IIC was authorised to manage the movement of assisted labour migrants to Malaya by monitoring the number of recruiting licenses given to the kangani and also the recruiting allowance or subsidy to migrants. Crucially, this legislation resulted in Indian labour migration evolving into two distinct categories, namely recruited and non-recruited migrants. Henceforth, whether migrants were recruited under the kangani system or arrived independently, they were considered “free” migrants.
Settling Indian labour
These transformations represented a major policy change, i.e. a move away from labour circulation to a permanently settled Indian labour force on plantations. Consequently, Indian workers recruited under the auspices of the Fund were subsequently either confined to plantations or government public projects in emerging townships.
Furthermore, although workers arrived in Malaya without any debt obligations, they continued to be considered under contract to plantation owners and under the supervision of the kangani. The government also upheld penal sanctions for breaches of labour contracts.
These penal provisions were only abolished in the Malayan Labour Codes of 1921 and 1923. Plantation production was also organised on military industrial lines and about 1,000 workers were employed on one plantation.
In the early 1920s the colonial government implemented reforms that had broad implications for subsequent Indian welfare and the Indian sex ratio in Malaya. These changes were incorporated in the 1923 Labour Code. The Malayan government endorsed two main codes: a standard wage and an improved sex ratio on the plantations, in accordance with earlier Emigration Acts.
Wages were sufficient to induce migrants to migrate to Malaya and were not revised upwards when rubber prices rose. Thus the plantation wage structure continued to be a productivity-linked wage scheme. Consequently, an Indian worker’s income, despite incorporating the concept of a standard (maintenance) wage, was based on the number of days worked. Employment was also tied to the price of rubber.
Chinese labour
A second labour reserve comprised Chinese workers. Chinese migration overseas could best be described as being conducted under both a personal recruitment system and a mixture of recruitment arrangements directed by Chinese business interests. The recruitment method included a kinship-based migration network in China and the credit-ticket network in Malaya.
The kinship-based migration network involved recruiter-couriers who recruited migrants from their own villages/regions, and relatives or friends from the migrants’ hometown normally guaranteed the passage and travel expenses. The credit-ticket system, which most migrants relied upon, necessitated the passage and travel expenses being paid by labour brokers, captains of junks or labour agencies.
The system exemplified the ‘coolie’ trade that supplied the greater part of Chinese labour migrants. This trade was controlled by Chinese and foreign agencies in the Chinese treaty ports. The migrants normally entered into verbal or written contracts for the repayment of their debt in the form of labour service. There was no recognised “establishment body” and the influence of secret societies was ubiquitous. Labourers were free men and often changed employment and job location depending on market conditions.
Parmer argues that the system of contracted workers on the rubber plantation was a Chinese innovation. This system allowed European planters to manage Chinese workers through Chinese labour contractors. Planters paid the contractors on the basis of specific work contracts on plantations. The contractors then paid the workers their wages and supplied housing and other supplies, including food.
Javanese labour
Javanese workers comprised another labour reserve since planters were concerned about being unable to maintain a continuous and unlimited supply of workers, following the abolition of Indian indentured labour in 1910.
The Javanese were recruited as indentured workers until the early 1930s. The Dutch colonial government in Indonesia regulated their employment while Dutch recruiting firms handled the recruitment procedures. They formed the smallest proportion of rubber plantation workers on Western plantations.
All three groups worked under different employment conditions on the one plantation and had dissimilar pay scales and labour protections.
According to Bauer European planters made use of south Indian labour as the permanent core of European plantation labour forces, in a ratio of about 10.2 Indians compared to 2.7 Chinese, per 100 planted acres. Whereas Indians were housed in permanent lines (compound housing) in the central section of the plantation, Chinese contract workers lived outside the plantations in their own kongsi accommodation (communal housing) or in separate huts.
Javanese also lived in compound housing but they had greater opportunities for interaction with Malays due to language and religious connections. The entire process of labour market functioning and organisation in the plantation sector was effectively regulated through legislation, recruitment systems and immigration policies that served to protect the interests of Western firms and maintain workforce fragmentation. The colonial administration was also able to repatriate unemployed Indian workers during depressed economic conditions while Chinese workers’ mobility was restricted through immigration policies, since they were considered aliens.
Most marginalised
The Indians were the most marginalised of workers. They resided in closed plantation societies in frontier zones and the plantation symbolised the boundary of their existence.
The isolation of plantations and colonial vagrancy laws also prevented them from leaving the plantation. In any case, the Indian workers’ low caste backgrounds and inability to speak either Malay or English intensified their isolation and vulnerability. They were trapped in an unending cycle of dependency and poverty on the plantation. According to one writer, the provision of housing and other amenities by planters had a built-in mechanism for social control. Labourers living in estate housing were not charged rent (which was included in the wage calculation).
Consequently if they were dismissed, they faced eviction. They were thus effectively tied to the estates and the low-wage structure inherent in the plantation system.
Crucially, the plantation system infantilised the Indians since they became dependent on their plantation masters for provision of services such as housing, crèches, and plots for growing vegetables or raising livestock and had problems making the transition to urban surroundings when they were evicted from the plantations.
Oil palm plantations
In the aftermath of the 1969 racial riots, the national government instituted a new policy known as the New Economic Policy, which incorporated poverty reduction and income redistribution programs based on affirmative action policies on behalf of the Malays. The state’s economic goals prioritised a centralised approach to national development and economic diversification.
The main concern was to raise the standard of living of Malays and hence a rural development strategy became critical in development planning. The rural development strategy and land reforms thus correlated with the opening up of large areas of land for commercial crop production to raise the incomes of the rural poor and landless Malay peasants.
The reforms incorporated block new planting schemes under the Rubber Industry Smallholders’ Development Authority and the Federal Land Development Authority (FELDA). The rubber industry thus underwent a major replanting and operational reorganisation phase.
FELDA, on the other hand, was tasked with diversification of crops and led the move into oil palm production. Concurrently, between 1957 and 1960 over 300 rubber plantations with a land area of about 230,000 acres were converted into smallholdings. This figure rose to about 324,000 acres in 1967.
The fragmentation of plantations had severe repercussions for the Indian plantation workers and most of them returned to India. Subsequently attempts were made to form plantation workers’ cooperatives to purchase rubber estates for them but these involved small numbers of Indians.
'Foreign' Asians
Since colonialism had also bred resentment of foreign Asians in Malaya, the national government instigated new legislation in 1957 that effectively closed access to the labour market for them.
“Foreign” Asians or “aliens” (Chinese and Indians who were not granted citizenship) were forced to leave or were repatriated, despite their earlier connections and residence in the country.
The Malay-dominated government’s Immigration Act 1959 was primarily intended to control the movement of non-citizens into the country. Next, after the creation of Malaysia (1963), the government passed the Employment Restriction Act 1968, which was intended primarily to restrict the quantity and manipulate the ‘quality’ of migrants to ensure that only skilled non-citizens were permitted entry into the country.
The government also made it compulsory for non-citizens to apply for work permits for about 2,000 employment categories. These included the plantation industry, railways and municipal services, all of which were dominated by Indians.
The Indians’ work permits were non-renewable and consequently 60,000 Indians left for India. Although they were eligible for citizenship, they were unable to acquire citizenship, and their reasons for wanting it to secure employment were not acceptable to the Malays.
Orphans of empire
The new exclusionist policies also discriminated against Indians’ economic and political rights, turning them into “orphans of empire”.
Importantly there was a shift in citizenship classification categories in the country. From an earlier racial categorisation, Indians became non-citizen aliens and were transformed into “stateless” and illegal migrants.
The new Malaysian state hence became a closed labour market and citizenship conferred both the right to reside and work in the country. The share of Indian workers in agriculture (i.e. plantations for the Indians) declined, falling from 12.8 per cent in 1950 to 9.7 per cent in 1970. Most of the Malayan citizen-Indians then either continued to work on rubber plantations or were absorbed within the oil palm sector.
But the demand for a less-skilled hired workforce had not diminished in Malaysia. The government subsequently modified its labour migration policy and this change signalled a second period in the history of plantation structures and associated labour regimes. Indonesia, Thailand and subsequently Bangladesh became the preferred labour providers for the plantation sector and the workers were hired under guest worker schemes. Employers also subcontracted all responsibilities to labour contractors.
This second period of foreign labour recruitment for the plantation sector is best observed through the lens of business cycles and structural changes in the Malaysian economy. During an initial phase the government surreptitiously allowed local contractors/intermediaries to recruit Indonesian workers from the Indonesian squatter settlements in Kuala Lumpur and the Klang Valley. Subsequently both regular and irregular migrants formed the nucleus of less-skilled foreign workers in the oil palm plantations during this period.
In the 1980s an offshore recruitment program was started, consistent with the launch of a consortium of labour recruiting agencies in Indonesia, known as the pengusaha pengerah tenaga kerja Indonesia (PPTKI) in 1981. This consortium was established by the Indonesian Manpower Supply Association to organise and manage Indonesians migrants’ mobility overseas.
The Malaysian government’s intention was to keep the workers coming through legal channels and it then established a Committee for the Recruitment of Foreign Workers in 1982 to ensure the Indonesians were employed in the designated sectors. This was also done to appease Malaysians generally, the Malaysian Trades Union Congress, representing Malaysian workers, and opposition leaders. Afterwards, Malaysia instigated labour accords with labour-sending countries.
The government’s role was largely confined to official immigration procedures and formalisation of recruitment regulations while employers and private recruiting agencies handled recruitment tasks. Consequently, migration industries evolved in both countries to handle the trade in migrant workers under explicit conditions.
Contract migrant workers were categorised as semi-skilled or unskilled workers (who earned less than $2,500 per month). They were given visit passes for temporary employment in Malaysia and the passes were used to regulate their admittance, place of residence and employment type. They were not allowed to bring their dependents with them.
The government’s plan was to ensure that the workers’ employment remained temporary and encourage employers to introduce labour-saving technology on plantations. Another major policy change impacted on the remaining Indian plantation workers’ employment conditions. In the 1980s, rubber and oil palm planters extended the contract system to Indian workers, although Indians were employed directly by them. One researcher has surmised that since the “ties” between the kangani (the field supervisor) and Indian workers had been removed following passing of the 1955 Employment Act, planters extended the contract system to their Indian workers in order to have greater control over them.
Recurring policy
Against the backdrop of continuing irregular migration and depressed economic conditions the government then suspended foreign labour recruitment in 1986. Then, in 1989 the government introduced another policy amendment, i.e. declaration of an amnesty for the irregular workers, followed by a legalisation program for these (mainly Indonesian) workers in the oil palm plantation sector.
The government’s regularisation program subsequently became a recurring characteristic of Malaysian foreign labour policy and a long-term policy instrument for labour force growth. In implementing this strategy of offering amnesty and an opportunity to become regularised, Malaysia followed closely behind the United States, Europe and Thailand.
Furthermore, the policy also contributes to a larger legal labour pool that has consequences both for domestic and international investment. Simultaneously, the government introduced a levy or tax to reduce planters’ reliance on foreign workers and encouraged them to upgrade their operations. This annual levy (or tax) on migrant workers was stipulated in the 1991/2 national budget and the levy differed according to the sector and migrants’ skill categories (general, semi-skilled and unskilled).
Although the levy was imposed on employers, in fact levy payments could legally be passed on to workers from 1992 -2009. In 2009 employers became responsible for payment of the levy but this ruling has recently (2013) been rescinded, with the implementation of a minimum wage, so as not to “burden” employers. One reason could be that “2013 is an election year and strange things happen in election years”.
Nevertheless, the harsh working conditions and remoteness of plantations, coupled with a non-existent social life and the contract labour environment, resulted in workers absconding and also deterred employee stability on plantations.
Compared to other sectors, the government has been “fairly generous” as regards plantation workers’ contract periods. The contracts have been extended from 3 years in 1984 to 5 years in 1994 and 7 years in 1998.
In 2002 the figure dropped to 6 years and employers were allowed to recruit workers from 9 countries. The government also enacted new legislation, the Workers Minimum Housing Standards and Amenities Act 1990. This legislation prescribed minimum standards of housing and provision of nurseries for workers and their dependents. Additionally, employers were required to allocate land for cultivation and grazing and provide medical and social services. Nevertheless, the legislation was initially applicable to Peninsular Malaysia only and covered plantations that were more than 20 hectares.
Mismanagement
Thus the oil palm plantation complex has been beset with acute problems under the national government’s (mis)management of the plantation system. The contractor system has also led to allegations of forced labour in the oil palm industry by the United States Department of Labour and the Malaysian government has had to pass new legislation on working conditions.
Planters also dislike having to rely excessively on one particular ethnic group and the guest worker program since the oil palm industry is seen as “the pillar of rural economy and provides job opportunities for more than 1.5 million people in the sector.
Overall, the government’s policy of undue reliance on cheap foreign labour and the plight of the dispossessed marginalised communities in the country have clearly contributed to this dismal situation. Perhaps the new minimum wage in the plantation sector (as of 2013) may draw in some of the earlier marginalised Indians but it will certainly require more accommodation on the part of the state to make it work.
-harakahdaily
