Friday, 19 September 2008


With determined leadership, workers realizing their collective strength could win concession from employers.

After 4 months’ campaign following their company ownership change, on 5th September 2008 Hualon Corporation textile workers in Nilai and Melaka received compensation ranging from RM1, 000 to RM17, 000 based on years of service.

Malaysian law does not guarantee worker rights for compensation when a company goes bankrupt. Worker compensation normally comes last after settling debts and paying creditors. In most cases worker rights are denied.

Hualon, a Taiwanese multinational was brought under receivership and management of Ernst and Young in November 2006 when its owner was declared insolvent. Since then, the receivers had managed the company before it was sold at the end of 2007 to Reliance Industries Limited (RIL), an Indian multinational. From 1 Sept 2008, Recron, the RIL’s Malaysian sister company has managed the plants.

Two textile plants of Hualon in Nilai and Melaka employed about 8,000 workers – almost half were migrant workers from Indonesia, Vietnam and Bangladesh. Since the ownership change issue emerged last year, Hualon workers in Nilai had queried the management over compensation for their labor. Some workers who had worked since the establishment of Hualon became infuriated when they were denied compensation.

CWI members met several workers during worker rights campaign in Nilai.
Established in Malaysia in 1989 with RM39 million capital, Hualon had since become a main exporter accumulating RM858 million capital with RM2.1 billion turnovers yearly. The workers argued that they had helped Hualon generate huge profits which Hualon largely used to invest in other countries. Moreover, in 19 months under the receivership, Hualon registered significant profit. The receivers had also gained billions of ringgit by selling Hualon’s assets to RIL.

With laws favoring the employer and without a union to initiate a campaign among workers in Nilai and Melaka, Committee of Hualon Workers (CHW) was formed. CHW first demanded the receivers to immediately clarify about retrenchment benefits, remuneration and positions under the new ownership. CHW’s campaign and petition over these issues were supported by around 500 mostly local workers. CHW realized the management would pressure the migrant workers and even revoke their work permit. However, few of the migrant workers supported the campaign.

After persistent demand from CHW, the receivers finally agreed to pay the workers retrenchment benefits according to the labor laws, and their positions and benefits be retained under the new management. It then rumored that only permanent local workers would get retrenchment benefits.

Subsequently, CHW petitioned again, specifically focused on compensation, and this time was supported by more than 1200 workers. The demands were (a) The minimum retrenchment benefits per the labor laws plus ex-gratia of up to 25 days pay per year according to their years of service for local and migrant workers (b) Retrenchment benefits to workers who had achieved retirement age but whose service had continued, should be calculated from the first year they joined the company and (c) Retrenchment benefits to contract and semi-contract workers.

The receivers then agreed to the second and third demands but they would not give more than the minimum amount per the labor laws. CHW demanded the receivers justify their unwillingness to meet the first demand through negotiations. CHW argued that the workers had been working for low wages under Hualon, and should be compensated more than the minimum guaranteed by law. But under pressure from CHW, the receivers finally assured that wages and other remunerations would improve under the new ownership.

Meanwhile, the management staff and professionals in the company rode on the workers’ success to demand compensation for them as well. They took a day off to protest against the receivers’ unwillingness to compensate them. This pressured the receivers, and after a few negotiations, the receivers agreed to pay them two-month salaries.

This modest victory has increased the confidence of workers in CHW. Now CHW is discussing with workers about joining the state textile union to strengthen worker bargaining power.
CWI will continue supporting CHW and Hualon workers, and campaign for a fighting and democratic union:

1. Trade union democracy – form rank-and-file groups in every union.

2. Regularly elect and recall union officials and organizers.

3. Union officials to receive average wage of workers they represent, and funds for actual expenses.

4. Elect delegates or shop stewards by workers in every workplace.

5. Hold regular mass delegate meetings.

6. Vote on major issues at mass meetings of union members.

7. No secret negotiations between union officials and employers. Delegates or shop stewards to accompany union officials in negotiations with employers.

8. Fight anti-union laws with worker mobilization and industrial action.

9. Conduct a mass campaign to defend worker rights to organize, strike and picket without legal restrictions.

10. Fight for equal rights for migrant workers. Abolish immigration laws that restrict them to organize.

11. Internationalism – Unions to collaborate on resources, solidarity boycotts and industrial action.

12. Support workers fighting for wages rise and conditions in so-called ‘third world’ countries and prevent employers from shifting plants offshore.

13. Build a genuine mass workers’ party based on trade unions, progressive community organizations and working class people.
CWI Malaysia,

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