KUALA LUMPUR: Reducing the Employees Provident Fund (EPF) contribution rate for foreign workers from the proposed 12% to 2% has implications for the financial security and social protection of migrants, says Tenaganita.
The human rights NGO's executive director Glorene Das said while industry players welcomed the government's decision to lower the rate, there are significant concerns that should be addressed.
"The move further marginalises foreign workers, who face systemic discrimination despite their significant contributions to the economy, and this denies them meaningful financial security and social protection," she said in a statement on Sunday (Feb 16).
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"While businesses may argue that this reduction provides them with financial relief and allows for better planning, migrant workers, who are critical to sustaining key industries, are not being given equal treatment in financial security and retirement planning.
"We (Tenaganita) have spent decades advocating for migrant workers' rights, particularly in fair wages, ethical labour practices and access to social protections," she added.
Glorene said that to ensure a fairer and more sustainable policy for both migrant workers and businesses, the government should consider a gradual approach rather than an immediate and drastic reduction in EPF contributions.
There should be a balance between worker protection and business sustainability to ensure that policies are not shaped solely by corporate interests, she said.
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Glorene also suggested a tiered contribution system as a more equitable solution, with workers in lower-wage sectors contributing at a progressive rate, increasing gradually over the term of their employment.
"We have seen first-hand how policies that exclude migrant workers lead to wage theft, forced labour and deepening economic vulnerability.
"The drastic reduction in EPF contributions reflects a broader pattern of exclusion, treating migrant workers as disposable labour or a commodity and a means to profit, rather than essential contributors to Malaysia’s growth," she said.
She said reducing the contribution rate to 2% sends the message that, despite their critical role in industries like electronics, palm oil and construction, foreign workers are not entitled to the same security as Malaysian workers.
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"Many migrant workers struggle to send money home, burdened by low wages, high recruitment debts and deductions.
"The 2% EPF contribution does little to build meaningful savings, leaving them vulnerable once their employment ends.
"If labour protections continue to deteriorate, Malaysia risks losing credibility as a responsible global trade partner.
"Increased scrutiny from international watchdogs could result in negative impacts on exports, global supply chains and foreign investment, harming the nation’s economic standing," she said.
Recently, Prime Minister Datuk Seri Anwar Ibrahim announced that the mandatory EPF contribution for foreign workers will be capped at 2% following proposals from business groups.
During the presentation of Budget 2025 last year, Anwar said the government planned to make it mandatory for all non-citizen workers to contribute to the EPF, with implementation to be carried out in phases.
This sparked opposition from businesses, who said the government should not subject foreign workers to such contributions.
