Concerning article/my personal analysis – 6th Aug 2022: Employment agencies in Malaysia can still collect fees, minister clarifies

Interesting article here Employment agencies in Malaysia can still collect fees, minister clarifies (copied in full below)

In my experience, these Malaysian manpower/employment agencies (not always licensed too, many bogus fake employers acting as outsource agents too) already take so much money from migrant workers in source country anyway, without the need for stressing their right to charge workers for their services on arrival also.

These Malaysian agents take money from the foreign workers in source country in the form of illegal/corrupt and informal kickbacks demanded by them from source country manpower agents, by charging source country manpower agents for the employer’s demand and recruitment opportunity RM1000s per pax.

Which source country agent pays the most kickback money to the Malaysian agent gets the job recruitment order from a Malaysian employer.

Bangaldesh kickback costs paid to Malaysian agents by their manpower agents seem the highest, then Indian, Nepal, Myanmar, Indonesia…. RM1000s per pax.

Often it seems Malaysian agents and employers/HR staff may chose the country of recruitment of foreign workers based not on worker skills/suitability but on where they can get the opportunity to earn most in illegal kickback payments from the source country agents and workers, it is often alleged.

This kickback money is often paid in cash to Malaysian agents by source country agents when the Malaysian agents come to source country for worker selection/departure, or the money is transferred through informal channels to the agents in Malaysia.

And all kickback costs paid to the Malaysian agents are then charged/passed on to the often impoverished and at risk foreign worker as their source country recruitment costs by the source country agents in the source countries.

Then these Malaysian agents are also sometimes paid by employers for their duty, which is actually very limited, but can importantly involve also bribing Malaysian officials for issuing foreign worker quotas etc.

And then these Malaysian agents can by law, as the Minister is stressing now, take another month’s salary from the migrant workers on arrival as an additional charge too!

I always believe it’s better to avoid these Malaysian agencies totally as it’s a very confused and dirty issue, very costly, murky world of labour supply chain.

These Malaysian manpower agents are most often simply vehicles for systemic corruption and abuse of workers and undermining the rule of law, providing limited services for both employers and workers.

Too many actors in the labour supply chain already if Malaysian agents are also used for recruiting foreign workers in addition to source country agents by employers. Too many risks.

And then not to mention the whole non transparent Malaysian migrant management systems and all the charges there too.

All the costs add up, all the corruption/non transparent charges and processes continue at multiple levels. All the costs end up on the shoulders of source country workers and that is a huge debt bondage and forced labour risk.

And most costs and abuses associated with all this foreign manpower recruitment starts and ends in Malaysia itself, not in the source countries.

A massive clean up is needed urgently to combat forced labour risks for migrant workers recruited to work in Malaysia, often in huge debt from exorbitant recruitment fees, that stems mostly from systemic corruption and abuse in Malaysian migration systems by Malaysian manpower agents and Malaysian officials (and sometimes Malaysian employers too)

That need for a clean up should perhaps be the focus of the Minister here, not his stressing the right of these often corrupt and non transparent Malaysian manpower/employment agencies to charge yet more money from workers in law too.

Article copied in full below..

Employment agencies in Malaysia can still collect fees, minister clarifies

B Nantha KumarPublished: Aug 6, 2022 6:23 PM⋅Updated: 6:23 PM

Human Resources Minister M Saravanan has clarified that licensed private employment agencies are allowed to impose a fee on employers, local jobseekers, and non-citizen workers.

He acknowledged that many were confused after two individuals were arrested by the MACC on Wednesday (Aug 3) in relation to private recruitment agencies.

“I received many calls after the arrest. They were confused as to whether private recruitment agencies are no longer allowed to collect fees from employers and employees.”

“I would like to clarify, the act of collecting placement fees is allowed as usual under the Private Employment Agencies Act,” Saravanan (above) told Malaysiakini.

He said the Private Employment Agencies Act 1981 (Act 246) is a law enforced by his ministry through the Department of Labor and controls private employment agencies in Malaysia.

“Under the act, the license holder is allowed to charge a fee to any local job seeker for all categories of employment whether to work within or outside Malaysia.

“The placement fee can be charged either to employers, local jobseekers, or non-citizen workers,” he said.

However, he warned strict action will be taken against any employment agency for wrongdoing, including corruption.

On Wednesday, the MACC arrested a businessperson in his 30s and an owner of an employment agency company in his 50s.

According to a source, the businessperson was being investigated in connection with bribery amounting to over RM1 million and the other was suspected of paying bribes to companies providing platforms for foreign worker applications.

Additionally, six suspects were arrestedincluding a CEO of an IT company, a senior officer of said company, and four others from a recruitment agency.

Charging fee is old practice

Meanwhile, Saravanan said the act of charging this fee has been a practice for a long time.

“It was already a practice before I became a minister. It is not something new. However, the ministry, under me, has made an improvement to overcome previous weaknesses.

“Any element of corruption involving these agencies will be subject to action from the relevant departments,” he said.

Private employment agencies, he said, can impose a placement fee of up to 25 percent of the first month’s basic salary of a local employee.

The fee can be no more than one month of the first month’s basic salary of a non-citizen employee, he added.

It is a crime for the agency to charge excessively. Those who are convicted can be fined up to RM50,000, imprisoned for not more than one year, or both.

“Anyone who carries out recruiting activities must be licensed. Failing so, he or she, if convicted, can be fined up to RM200,000 or imprisoned for not more than three years or both,” he said

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