Transforming Industrial Relations : the Case of the Malaysian Auto Industry

By Peter Wad

Department of Intercultural Communication and Management (DICM),
Copenhagen Business School.

The decentralisation of collective bargaining has been a significant trend in Western labour markets during the 1980s and 1990s, and it has challenged conventional trade union strategies and practices in many ways. In the same period we have witnessed a decentralisation of trade union organisations in East Asian market economies. The decentralisation of whole industrial relations systems, i.e. bargaining and organisational decentralisation among and between employers and trade unions, is a more unique phenomenon and very little studied. The Malaysian auto industry provides an organisational field where the trend towards double decentralisation emerged during the 1980s and continued in the 1990s, without becoming a completely decentralised system.

To understand changing industrial relations systems it is important to consider it as a system of multiple social actors, who interpret, act and interact with other actors in accordance with their position, strategic outlook and perception of the concrete situation. Industrial relations thereby evolve in a contextual and situational frame of political-economic power relations and socio-cultural institutions of meaning and interaction. Taking advantage of this approach this chapter aims to explore the industrial relations dynamics behind the trend toward industrial relations decentralisation in the Malaysian auto industry in order to explain the forces behind changing industrial relations and especially the role played by industrial and enterprise unions.

Taking one sub-sector (the transport equipment industry and especially the auto sub-industry) as its focus, the analysis will span the period from the late 1960s to the Malaysian crisis at the end of the 1990s, which covers more than two business cycles and a turbulent period of Malaysian political economy and trade union development(Jomo 1993, Jomo & Todd 1994, Khoo 1997, Rasiah 1995, Rasiah & Hofmann 1998). The argument is based on research evidence at the industry and organisational levels of the Malaysian manufacturing sector and auto industry during the 1980s and late 1990s. Most of the material was collected by the author during field research in Malaysia in 1995, 1996, 1997 and 1999, supplemented with material from earlier research in 1983, 1984 and 1987.3

The chapter is structured in the following way. The political, economic and social history of the contemporary Malaysian industrial relations system is briefly outlined, providing the background for the development of the Malaysian auto industry, and the changing industrial relations of the auto industry. These changes are periodised by the centralisation of the industrial relations system 1971-81 and the decentralisation of the system due to the collapse of decentralised collective bargaining and the rise of enterprise unionism from 1982 onwards. The dynamics of Malaysian industrial relations are explained in terms of their related social actors: labour, employers, authorities and more encompassing systems of political power, business restructuring and crisis, before the paper is concluded

The History Of Malaysian Industrial Relations

Malaysia became incorporated into expanding European capitalism from the early sixteenth century. This inclusion evolved through mercantilism (1500-1850s) driven by the Portuguese and the Dutch, colonialism driven by the British (1850s-1930s and 1945-57) and the Japanese (1941-45), post-colonial industrialisation (1960s) and ethnonationalist economic development (1971-present). A productive market economy was built during British colonialism with the establishment of capitalist plantation and mining export industries, based on immigrant Indian and Chinese labour. During the 1970s and 1980s the political-economic strategy (New Economic Policy, or NEP) sought to modernise the rural Malay population by providing jobs, housing and formal education in urban areas. Positive discrimination in favour of the Bumis (comprising Malays and indigenous populations) continued in a less rigid form with the National Development Policy (NDP 1991-2000), influenced by the deregulation and liberalisation measures applied during the economic crisis 1985-86 and the booming economy around 1990. In 1991 the Bumis came to be the dominant Malaysian labour force in agriculture, forestry & fishing (72%), manufacturing (52%) and services (56%)(Population and Housing Census, Malaysia 1995 table 1.1). Yet, in 1995 immigrant workers probably reached 30-40% of the workforce in agriculture, forestry and fishing, 13% in manufacturing, and 30-40% in construction (Edwards 1997:18)….

Please click the following link to download full article: