The role of ethnicity in employee relations: The case of

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The role of ethnicity in employee relations: The case ofMalaysia

Chris Rowley*City University, London, UK

Mhinder Bhopal*London Metropolitan University, London, UK

The role of ethnicity continues to be underplayed in employment analysis. Given the fragmentation of many homogenous societies and workforces and theirincreasing heterogeneous nature, such neglect not only highlights partiality, but isalso problematic at the level of analysis, policy and practice. Likewise, the state andcapital have been seen as overly uniform and monolithic rather than as shifting,transient and fragmented. Furthermore, the establishment and continuing growth of first and subsequent generation citizens implies a more nuanced analysis will berequired of not only labour, but state and capital as well. These issues, however, arenot unusual, nor marginal (although they may be marginalised), in some countries.We use the example of Malaysia, itself an old colonially produced type ofmulticultural society, to show the weaknesses of traditional views and to analyse and highlight the impacts of ethnicity with a view to developing a framework forincorporating this dimension into the discourse of employment.

Keywords: diversity, employee relations, ethnicity, Malaysia, state, trade unions

In a more heterogeneous employment world, ethnicity1 is increasingly import-ant. In the prescriptive and practitioner-type management literature there havebeen ideas of managing multicultural workforces (Tayeb 1996) and the evolution

Correspondence to: Professor Chris Rowley, Faculty of Management, Cass Business School,City University, 106 Bunhill Row, London, EC1Y 8TZ, UK; fax: +44 (0)207 040 8328; e-mail:[email protected]

* We would like to thank the British Academy Committee for South East Asian Studies forsupport that contributed towards this paper. We would like to thank Wendy Smith for herperceptive points on an earlier draft of this paper. All remaining mistakes remain ours.

Asia Pacific Journal of Human Resources. Published by Sage Publications (London, Thousand Oaks, CA andNew Delhi; www.sagepublications.com) on behalf of the Australian Human Resources Institute. Copyright © 2005Australian Human Resources Institute. Volume 43(3): 308–331. [1038-4111] DOI: 10.1177/1038411105058704.

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of older equal opportunities into newer managing diversity campaigns (Ellis andSonnefield 1994). However, beyond such moves a strange silence in the analysisof ethnicity has prevailed. This paper aims to redress the balance.

Over the past three decades significant changes have occurred in the fieldof employee relations (ER) and its analysis. The traditional structural focus hasincreasingly given way to a focus on process and whilst the agenda has beenwidened Despite these shifts the role of ethnicity remains underplayed. Giventhe increasing ethnic diversity in the workforce and population demographicsin once homogenous societies such neglect highlights partiality and is prob-lematic at the level of analysis, policy and practice. Likewise, state and capitalare not uniform nor monolithic but shifting and fragmented.

Due to the economic imperatives of the ‘developmental’ or ‘dependent’state the relationship between the state and labour in Asian ER has beenassumed to be based on incorporation or suppression (Deyo 1989). Such macro-structural explanations underplay the significance of national institutionalcontexts within which developments evolve.

We use the Malaysia example to highlight the impacts of ethnicity with aview to developing a framework for incorporating this dimension into ER.The historical tensions and resulting institutional ‘sedimentation’ whichinformed the strategic choice of the ER actors (Poole 1986) in their unfoldingresponses to the Asian Crisis and political ferment are outlined. We argue thatthe historical impact of ethnicity on the development of Malaysian tradeunionism is withering away. Nevertheless, the response of the labour move-ment to new opportunities needs to be viewed in the prism of the context ofethnic identities.

This paper takes the following structure. First, we outline the theoreticaland conceptual apparatus that will assist in framing our exposition of ethnicityin ER and implications for state strategies towards the management of labour.Second, we present the case of Malaysia and the ER evolution. A section onlabour–capital intra-ethnic tensions is then followed by discussion and conclu-sion sections.

The role of ethnicity in employee relations 309

1 Ethnicity and race are different concepts. Race as a biological concept tends to imply biological differences between ‘racial’ groups although the main visible differences, which are largely visible, are accounted for by very few genes (Miles 1982). Notions of race act to negatively evaluate or justify unequal treatment of the defined group (Banton and Miles, 1996). While inter-group superiority and inferiority underpin the notion of race, the concept of ethnicity is primarily an intra-group process. Ethnicity is defined as a people or nation ‘possessing some degree of coherence and solidarity … who are, at the least latently, aware of having common origins and interests’ (Cashmore 1996, 102). Perception of common origin, but may form around language, religion, custom, etc., and provide opportunity for innumerable subdivisions. Ethnicity thus enables a richer appreciation of situations.




The role of dependency, action and ethnicity

Dependency and diversity

Studies of ER (following Dunlop 1958) identify state, labour and capital asprincipal actors. The current globalisation and earlier dependency theorydebates assumes the search by multinational companies (MNCs) for low labourcosts and weak labour organisation results in the suppression of trade unionismdue to ‘regime competition’ for foreign direct investment (FDI). Assumptionsthat states act as agents of capital to deliver labour subordination, however,omit the diversity and internal dynamics of local context (Deyo 1989).

Dependent states, reflecting labour and political considerations, canadopt at least three pro-capital labour strategies, each giving rise to particulartensions, which provide potential opportunities for action (Valenzuela 1992).First, states can sponsor and incorporate labour movements in an attempt tocreate co-operative and populist movements. Such arrangements, however,may become unstable where concession making is undermined by the contra-dictions between capital, labour and the state. Second, states that incorporatepeak labour movements to control autonomous action may find union legit-imacy being questioned and official labour movements being challenged.Third, where unbridgeable differences between political parties and labourmovements exist, the states may try to fragment and decentralise themovements. Exposing union movements to the market mechanism is associ-ated with attempts to weaken power by constraining unions’ ability toorganise and mobilise, i.e. via legislation. The aim is to prevent labourmovements from exerting economic pressure or becoming a platform forpolitical opposition to regimes. This strategy may raise issues of human rightsand democracy.

Action and context

Labour is not a passive bystander to unbridled state strategy. Trade unions areactors with potential for action and reaction, and can support or challenge statestrategies. This action cannot be read in a deterministic manner nor assumedto be consistent over time. Responses will be shaped by a variety of political,economic and social factors internal and external to the union and labourmovement. These include: the level, type, extent and intensity of industrial-isation; union relationships with the state and other forces; ideology whichshapes union practice or worker consciousness; and experience of struggle(Southall 1988); composition and characteristics of membership (includingexperience of urban industrialism see Smith 1996); accountability of leader-ship; extent of worker democracy; and commitment to shop floor and politicalstruggle.

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Ethnicity and identity

Some globalisation authors have argued that we are witnessing the end of thenation-state. However, while this applies implicitly to the role of the state in itsability (or desirability) to manage global capital, the state as a socio-culturalspace continues to exist, and human behaviour cannot be explained throughtextbook abstractions of ‘economic man’. Humans are socio-cultural beings,and not necessarily homogeneous ones at that. In this sense, states containdifferences within their boundaries, and their political and cultural spacesutilise difference as a distinguishing principle. The state provides one of theterrains in which conflicts of control over (or through) the apparatus of socio-cultural subjectivities is fought (see Goh Beng Lan 2002).

Ethnicity is underemphasised in theory and empirical analysis of tradeunion (or management) action. Such neglect may be explained by fears ofpotential political incorrectness or by the magnitude of organisationalcomplexity that such phenomena open; possibly too much to be encompassed bythe universalist offering of normative rationalist literature (see Clegg, Ibarr-Colado and Bueno-Rodriquez 1999). Issues of ethnic identity have also beenwritten off as false consciousness, and diversionary to analysis based on thelabour process (Mohapatra 1997). However, analysis of plural multi-ethnicsocieties, where political and social spheres are articulated in ethnic terms,indicate that there can be strong feelings of ethnic identity (Fenton 1999) andethnic identities can obscure class ones (Jesudason 1989). The form andsubstance of ethnic identity and its utilisation and leverage is not static asindicated by primordial and situational perspectives. In the primordial view,ethnic identity is seen as derived from the fact of being born into a particularcommunity and adopting its language, values and cultural practices (Hitchcock1999). As a social identity established in early life, ethnicity has been seen asmore robust and resilient to change in later life than other identities (Jenkins1996). In this view ethnicity is seen as a given – something that a community ‘is’.

In the situational perspective community identities are not static andethnic identities are produced and reproduced over time. Hall (in Grossberg1976, 225–6) argues that cultural identities are ‘the points of identification’which are ‘made within the discourse of history and culture. Not an essencebut a positioning. Hence there is always a politics of identity, a politics ofposition, which has no absolute guarantee in an unproblematic, transcendentallaw of origin’. The situational view sees ethnicity as a boundary definingpolitical project and as a political and power resource (Rex 1997; Hitchcock1999), which can be deployed to retain or challenge political control. Thereare two terrains (inter- and intra-) on which ethnicity can be utilised, withdifferent implications. With inter-ethnic competition the relative locations ofthe ethnic groups will be significant in understanding the manner in whichethnicity is leveraged (see Fenton 1999). Within intra-ethnic competition issuesof legitimacy and ethnic definition are prominent. Here myth and tradition





may be utilised to legitimate the respective political discourses. The inter-ethnic case concentrates on the power and unifying potential of ethnicityamong the ethnic ‘we’. The intra-ethnic case points to uncertainties in anyfixed notions of ethnicity and possible clashes over the signification process andestablishment of meaning which underlie the ethnicity project (see Hall, 1997).2

These points suggest that differences over the interpretation and exactmeaning of ethnic identity are less salient in defining oneself against others,and stronger in relation to the ethnic ‘we’. Identities are not solely constructedin ethnic terms, people have many identities, which can be constructed in termsof gender, class, occupational grouping, etc., giving rise to the potential formultiple identities (Allen 1994). Nonetheless, ethnic identification may beutilised instrumentally or opportunistically to mobilise support to achieve non-ethnic ends within the ethnic group. Multiple identities mean that divisionsarising from non-ethnic identities play out within ethnic boundaries. Indeed,the objective of actors may be to work within the discourse of ethnic identityto achieve particular non-ethnic ends (see for example Smith 1994a). In short,there are potentially multiple politics within ethnic groupings; and in societieswhere the ethnic discourse is used to define the ethnic ‘other’, competition forthe meaning of ethnic identity is also a resource for intra-ethnic competition.

These arguments reinforce the view that the manner in which labourarticulates political demands, and how it mobilises support, is contextuallyinformed and depends upon the nature of labour and the union movement,the state and the basis of political competition. Each of these phenomena is mutually interdependent; influenced by historical interaction and may be instrumental in determining long-term effects. While these effects can be transformative, they are mainly incremental, or reflexive, driven by thecontextually situated strategic choice of the actors, which create the future andreproduce the past and present (Giddens 1984).

To help ground our argument so far, and to aid understanding, we use aconceptual framework (figure 1) to locate ethnicity and its impacts for a morenuanced appreciation for understanding ER. The framework, following Poole(1986) and Giddens (1984), suggests that ER and its component actors, whileprimarily structured by wider forces, can also affect and modify the widerstructures in which they operate. However, first, structures do carry a heavyweight due to the processes of institutionalisation, and, second, change can bemore transactional than transformational. In short, the sedimentation of actualor represented cultural, historical and economic phenomena (through justifi-catory ideologies and theories) gives rise to the institutions of societal forma-tions and constructs contemporary identities within them. The populationstructure may assist in ensuring the perpetuation of these orders or may, due


2 For instance, Hua Wu Yin (1983, 10) argues that ‘in pre-colonial Malay society, a Malay “national identity” did not exist… The composition of the Malay population itself was by no means homogeneous’.




The role of ethnicity in em

ployee relations3

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Figure 1 The role of ethnicity in employee relations: Conceptual framework

Key:

Impact/links in employee relations

Impact/links of traditional context

Impact/links of ethnic context

Political Economic

Social Institutions

History Culture/ideology

(meaning of nation/self)

Ethnicity configuration (intra and inter ethnic)

Composition/demography Political, economic, social and cultural

practices Impacts:

Integrating/differentiating practices Patterns of consensus and conflict

Organisation/institutions

CONTEXT (Ethnic)

CONTEXT (Traditional)

Employee relations Structure process

(formal informal)

Management

Labour

State


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to demographic change and new, or competing, ideologies, act as an agent forchange. A significant part of demography is ethnicity, which affects identity.On this basis, one of the glues and solvents in society is the notion of ethnicidentity. Ethnic composition and associated questions of national identity effectthe representations that constitute the discourse legitimating political, econ-omic, social and cultural practices. Such discourse may be reflected in thenature of integrating or differentiating practices, and patterns of consensus orconflict which themselves may be reflected in the fragmentation or coherenceof organisations/institutions. Discursive practices will serve to impact upon ERstructure and process and the ideologies, identities and priorities of the actors.

Propositions

The above leads us to a set of three interrelated propositions.1. States, even dependent ones, have choices in labour strategies, and these

are not deterministic but contingent on political, economic, social andcultural configurations.

2. These strategies are not just driven by capital, but labour has a role as notonly a voice, but potentially as a political actor itself.

3. The role of ethnicity is significant in subjectivities, not just in plural multi-ethnic societies, but also in mono-ethnic ones.

Methodology

The paper paper draws from a range and variety of sources including theauthors’ past research, which has continuously uncovered the omnipresence ofthe ethnic factor. The research cited here is of both primary and secondarynature and aims to highlight the importance of ethnicity as an underconsideredfactor in much employment analysis. The primary research has consisted ofstructured and semi-structured interviews and unstructured meeting over thepast decade. Visits to Malaysia were made in 1993–94, 1999–2000 and 2004,while some sources of information were obtained from activists visiting Londonin the wake of the 1997 Asian Crisis. The interview respondents include leadingmembers of the MTUC (the president, general secretary, two research officersand members of the Women’s Committee). Others interviewed over this periodinclude the Harris Solid State Workers’ Union (HSSWU) president; the generalsecretary of the ex-Malaysian Labour Organisation (MLO) and the leadershipof the Parti Rakyat Malaysia (PRM). Members of the Malaysian press have alsoprovided assistance and political insight as have members of academia andothers close to Keadilan and the Reformasi movement. Individual sources havenot been identified to protect the anonymity of the respondents in a volatile andongoing struggle between various factions.


The case of Malaysia




Further information has been obtained through e-mail correspondenceand questionnaires, and from other secondary sources including the newspapersarchive of the MTUC, various pamphlets, reports and books obtained from theMTUC, MLO and HSSWU. Colonial Labour Department Reports lodged atthe British Library of Political, Economic and Social Sciences were also referredto as were numerous books and articles on Malaysian labour history.

Background

Post-Asian crisis, the Malaysian economic growth recovered rapidly. The 1998minus 7.4% GDP transformed to a positive 6.1% in 1999 and 8.3% in 2000,giving a per capita GDP of US$3834, and a current account surplus of US$8.4billion (Australian Department of Foreign Affairs and Trade 2001). From 1996to 1998, unemployment increased from 2.6% to 4.9%, but then fell to 3.1% by2000 (Department of Statistics 2002). By 2002, GDP was estimated at US$95.7billion, some US$3290 per head, growing at 5%, with unemployment at 3%and inflation 1.7% (Financial Times 2002).

Robust employment performance was partly due to employer reluctanceto dismiss permanent local workers, and utilise temporary lay-offs, voluntaryseverance and other flexibilities (Peetz and Todd 2000). The legal and illegalmigrant labour force, estimated at 3–3.5 million (HRW 1998; Bhopal 2000)provided the numerical flexibility for rapid adjustment and enabled the stateto escape the dislocations of unemployment, albeit with reductions in indi-viduals’ income and spending power.

The Malaysian government can be categorised as a developmental state.While some enterprises have been privatised, significant state sector invest-ment remains. The government’s close alliance with the private business sectorand aim to bolster the economic status of the Malay and indigenous commu-nities is maintained through a variety of policies and programs, includingethnic share ownership and employment targets and quotas.3 Malaysia con-tinues to build its manufacturing base with a heavy emphasis on FDI drivencomponent and consumer electronics, which accounted for 33% of GDP in2000 (Department of State 2001).

There are three major racial groupings in Malaysia, with the total popu-lation of 23.27 million, comprising of: Malays 65.1%, Chinese 26% and Indians7.7% (Department of Statistics 2001). Malays are not homogeneous, and havethemselves supplanted the indigenous minorities, Prebumi (Hua Wu Yin 1983).Similarly, both the Chinese and the Indians are heterogeneous, differing byregion, language and religion (see Smith 2002). Nonetheless, the phenotype hasbeen the defining parameter of the race and ethnicity conflation. Ethnicity has


3 The 1974 Industrial Coordination Act directed that ethnic groups population levels needed to be represented at all levels of the organisation.




been the prime organising principle and basis of electoral mobilisation. As aresult, the language of ethnicity is not differentiated from the language of race.

Malaysia has maintained a multiparty political system with periodic freeelections since independence (1957). Inter-party electoral competition andpolitical organisation has been largely based on ethnicity and less explicitly oneconomic and political ideology. The parties as a consequence are largelyorganised according to ethnic identity. The main party in the ruling multi-ethnic coalition, the Barisan National (BN), is the United Malay NationalOrganisation (UMNO) representing Malays, while the Chinese and Indians arerepresented by the Malaysian Chinese Association (MCA) and the MalaysianIndian Congress (MIC). The opposition includes the Islamic PAS, the largelyChinese Democratic Action Party (DAP), and more recently the mainly Malay-based Keadilan.

The UMNO is the embodiment of the Malay interest and permeatessociety. Its organisational structure has 17 000 branches and 2.8 millionmembers (out of a Malay population of about 12 million). The UMNO definesitself as a party that strives to achieve national aspirations for the benefit of thepeople, religion and country. In this context, parties purporting to be multi-racial, given their political constituencies, are perceived to be ethnicallydominated, resulting in the de facto ethnicisation and reinforcement of such apolitical discourse.

Between independence and 1970 the proportion of the Malay populationin urban areas increased from 11.2% to 14.9%, while the Chinese remained thepredominant group in the higher paying metropolitan areas (Ooi Jin-Bee1976). The 1969 race riots, fuelled by wealth and income disparities andsparked by opposition party gains, led to demands for Malay economic equalityand resulted in the New Economic Policy (NEP).4 The policy aimed toeradicate poverty, restructure society and eliminate the association of economicfunction with ethnicity. Economic growth with positive discrimination ofMalays rather than redistribution from the Chinese was viewed as the vehicleto create Malay employment, including the development of a professional,managerial and entrepreneurial/business and share-owning class (Means 1991).Economic growth was to be enabled by a FDI-based export-orientated indust-rialisation (EOI) strategy, subsequently supplemented by an import substitu-tion industrialisation (ISI) strategy in heavy manufacturing sectors, such assteel and automobiles.


4 The NEP was a series of 5-year development plans from 1971, important after the 1969 race riots, themselves the result of perceived differences in economic status of the ethnic communities. The NEP was a major policy instrument and it politicised ethnic identities. Its aims were to eliminate identification of economic function with specific racial groups, e.g. affirmative action approach focusing on Malays aimed to increase equity holdings of them by economic growth and via some redistribution from ‘foreign’ holdings.




Between 1957 and 1990 industrialisation reduced the proportion of Malaysin agriculture from three-quarters (74.6%) to about one-third (36.7%), whilethose employed in manufacturing, commerce and private and public servicerose to over one-half (53%). As a consequence, while 59% of all trade unionistsand 54% of wage workers in 1988 were Malay (Labour and Manpower Report1988/89), by 1999 over 70% of union leaders and members and 60% of theMTUC General Council were Malay (Interviews 1999). Industrialisation notonly expanded Malay waged labour, but also created a Malay bourgeoisie anda government-sponsored rentier class (Gomez 1991; Munro-Kua 1996), suchthat the boundary between government, party and economic interests blurred,creating a new dynamic in Malaysia’s political economy (Bowie 1994). Despitethe rhetoric of wealth equality, intra-Malay economic inequality grew.

In sum, many of Malaysia’s problems are attributed to its multi-ethnicpopulation (Gomez and Jomo 1997). Some have seen the discourse of ethnicityas obscuring more fundamental structures of class domination and inter-ethnicelite accommodation (Hua Wu Yin 1983; Yun Hing Ai 1990; Gomez 1999).The issue of whether ethnicity is a problem per se, or one that is utilised tomaintain political dominance divides Malaysian analysts and activists.

Evolution of employee relations

The role of intra and inter-ethnic tensions can be witnessed in the evolution offour phases of Malaysian ER.

Trade unionism and anti-colonial politics – the Chinese era

The growth of Chinese-dominated general unionism in the 1920s reflected theethnic division of labour. In 1926 the Chinese Communist Party (CCP)organised the Nanyang Federation of Labour (NFL), particularly among theunskilled Hainanese labouring classes, which adopted an anti-British, anti-colonial stance. The intra-ethnic division of Indian labour, state regulation ofterms and conditions of employment and relative isolation in the plantationsector, contributed to Chinese dominance of the labour movement (Stenson1980; Hua Wu Yin 1983; Ramasamy 1994). The Chinese position reinforcedthe perception of their dominance and militancy among the working class aswell as their identification with China. Furthermore, solidarity was under-mined by wage practices: Chinese labour was paid by the towkay negotiatedpiece rate, while Indians had a state-defined day rate – and Chinese planta-tion earnings could be as much as 175% of Indian earnings.5


5 In 1929 Chinese plantation workers received around 85–90c per day compared to the 50–55c earned by Indians, though Chinese earnings declined to 30–40c in the depression year of 1931 (Ramasamy 1994).




The 1930s depression saw the reorganisation of the NFL into the MalayanGeneral Labour Union with the aim of maximising recruitment across ethniclines and enhancing class solidarity (Wad 1988). Migration restrictions andeconomic recovery enhanced the bargaining power of workers in the non-recessionary period between 1935–38 and 1940–41, and enabled increasingunion militancy led by the Communist Party of Malaya (CPM) in the earlierperiod and by Indian plantation labour in the latter. While largely driven byissues of terms and conditions, the increased militancy was underpinned bythe growing anti-colonial struggles in China and India6 (Stenson 1980; Jomoand Todd 1994; Hua Wu Yin 1983).

The early postwar period saw continued growth and militancy by thereorganised Pan Malayan Federation of Trade Unions (PMFTU). At its peak(1947), its 250 000 members represented 40% of waged workers and 80% ofunions in Malaya. While the PMFTU continued to be Chinese dominated,Indian trade unions were increasingly organised and by 1946 most had affili-ated with the PMFTU. While the union movement became an integral part ofa cross-racial alliance forged on the issues of citizenship rights and oppositionto colonialism, many unions remained ethnically divided, and ethnicity wasalso used to create division. For instance, strikes against pay cuts in 1947–48were met by increasingly organised employers associations that dismissedstrikers and utilised Malays as strike busters. Indian demands for pay com-parability with Chinese labour resulted in reductions in Chinese wages (Jomoand Todd 1994). The increasing assertiveness of the state and employers aimedat countering political co-ordination of the labour movement culminated inrequirements for union registration. Such state and employer actionscontributed to the conflict and eventual deployment of troops, political co-ordination of the labour movement the declaration of an emergency and theMalaysian ‘red purge’. As a result, the CPM was outlawed, unions in thePMFTU deregistered and their leaders either went underground or werearrested (some were executed).

Trade unions and responsible unionism – the Indian era

The British authorities aware of the need to channel people’s aspirations andto improve regime legitimacy in light of the growing opposition wanted to seean independent, responsible and autonomous union movement. The pluralismmodelled on British trade unionism was to be achieved through English-educated Indians. These Indians led organisation efforts in the Indian-dominated plantation sector, with assistance from employers and the Labour


6 For instance, Nehru and other Indian leaders visiting Malaya appealed for Indian union organisations to advance their economic position (Jomo and Todd 1994).




and Public Relations departments (Trade union advisors report 1950). Thus,the post-independence period saw Indian control of the union movement. Theassociation of ethnicity and trade unionism was reversed such that Indiansaccounted for 71% of all union members at its peak (1951), remained themajority up to 1963 and retained firm control of the MTUC (until recently).

The Indians, a small group in the country, were aware of the difficultiesof involving themselves in politics. The continued association of ethnicity withwaged labour in general and the labour movement in particular has doggedthe labour movement since its inception (Zaidi 1975). The post-independenceethnic accommodation whereby the Malay sphere of political influence wouldnot be challenged while the Chinese could pursue their economic activities,reinforced ethnic divisions. Spheres of influence were consolidated, withethnicity as the fundamental organising principle. Such political compromise,in conjunction with the ethnic division of labour and the ethnic characteristicof the labour movement, constrained the labour from pursuing a politicalstrategy to advance working-class interests. Two factors account for this. First,the absence of powerful representative party involvement in the politicalsphere carried dangers of incorporation given the almost complete control ofthe Alliance Coalition (a coalition of the main ethnic parties). Second, supportof opposition parties could lead to suppression and possible accusation of beingpolitically, and thus ethnically, partisan, particularly in light of the absence ofMalay waged labour. Such accusations carried the danger of undermining thehorizontal (class) organising principles of trade unionism, while bringingunions potentially into conflict with their potential future membership. Thereare many more factors undermining class solidarity, as mentioned above.

State suppression of the first wave of the CCP-controlled labourmovement in the late 1940s was possible owing to a number of factorsincluding their militant anti-colonial strategy, absence of Malays within theworking class, differential basis of pay between Indian and Chinese labour,internal political divisions within the Chinese community and the widerdebates about Chinese citizenship and the fear of Malays becoming a minorityin Malaysia (Comber,1983; Hua Wu Yin 1983; Jomo and Todd 1994). Controlof the state-sponsored Indian union movement of the 1950s required lesscoercive direct action due to four interrelated factors. First, the Chinese weredisorganised by state suppression and had little confidence in the newmovement. Second, the leaders were moderate anti-communists (Zaidi 1975),ensuring a compliant and responsible trade unionism. Third, control passedto Indians, who were the smallest and least influential group, whichcontributed to the movement’s numerical and political weakness (Jomo andTodd 1994). Fourth, the consolidation of ethnically based political partiesserved to undermine the movement’s ability to develop symbiotic links withpolitical parties without undermining the horizontal basis of union solidarity.Furthermore, in this context the labour movement was unable to exertpressure through ethnically organised political parties.





Trade unionism, globalisation and national development – the dusk of theIndian era

The limited scope for political action continued to restrain the labour movementpost-1970. For instance, given its political weakness the option of working withthe multi-ethnic, but largely conservative, coalition of the BN dedicated to lowwage EOI carried the possibility of incorporation and control. Alliance withopposition parties was equally fraught because their memberships were largelyfrom particular ethnic groups. Critical commentary was also difficult whileMalay labour constituted a minority and control of the union movement wasvested in Indians. The 1969 ‘race riots’, partly arising from conflict over culturalissues such as education and language in the context of Chinese electoral gains,enabled a nationalist discourse that emphasised the economic and culturalweakness of Malays in Malaysia. Resultant affirmative action programs, asembodied within the NEP, sought to elevate the Malays’ position while tradeunion issues of distribution were seen as secondary to the developmental processthat was presented as a policy shift to enhance Malay opportunity as a whole.Such advancement was articulated by the political elite, as a necessary prereq-uisite for ‘racial’ harmony in an ethnically segmented economy and multicul-tural society. In these circumstances, union involvement with opposition politicalparties, particularly non-Malay, carried the potential accusation of ethnic politicalassociation and lack of commitment to the policy of Malay advancement andnation building. These factors left the oppositional elements in the labourmovement open to state suppression, vilification and accusation of being politi-cally, and thus ethnically, partisan should they challenged state policy.

Since the early days, the issue of union involvement in politics has beenrecurrently debated, but defeated, in the MTUC (see Trade union news foroverseas 1959; Interviews MTUC 1993, 1999). At best the MTUC has only beenable to produce a manifesto specifying conditions for endorsing parties, thusavoiding being ideologically or ethnically tied. This pragmatic approachenabled the union movement to maintain the integrity of its central role ofpromoting the labour interest. Nevertheless, individual union activists andleaders tended to be party activists, with diverse affiliations to various, but essen-tially ethnically based, parties, which do not necessarily pursue a labour agenda.However, individuals’ activities have not fundamentally undermined a cross-ethnic trade union identity and commitment to the labour interest. As a result,the MTUC claims to be the only mass multiracial organisation in Malaysia. Yet,cross-ethnic trade union identity has tended to create some tensions within thelabour movement, as the integrative forces of a labour identity face divisivepressure from ethnicity and attachment to ethnically based political parties.

State justification of the suppression of trade unionism on grounds ofneeding to act against communism and forces of instability, however, becameuntenable. With the emergence of a Malay capital class and state-supportedFDI requiring low cost labour, it became increasingly implausible to attribute





Malay exploitation to the Chinese. In this context the MTUC and the labourmovement was represented as secondary to the primary goals of economic andcultural advancement and protection of Malay interests. The possibilities ofintra-ethnic class-based conflict with the potential to divide urban Malaypolitical loyalties has long been recognised (Hua Wu Yin 1982; Wad 1988; YunHing Ai 1990), but has not materialised. Nonetheless, the state recognised thepotential threats in the early 1980s when the ties between itself and the unionmovement ruptured.

The state never had a symbiotic relationship with the union movement,and only as part of a wider policy of co-opting oppositional forces in the early1970s did the state attempt courtship (Jomo and Todd 1994). Union oppositionto the state’s labour policy came to a head with the Malaysian Airlines dispute(1980), which led to arrests and dismissals of union activists, union deregistra-tion and a new wave of labour repression. The dispute was multiracial, withheavy activism by Malays, and supported with solidaristic international anddomestic secondary action. In light of such alliances, the state felt compelled tobreak the class basis of the confrontation at the outset (Munro-Kua 1996).Unions were deregistered, and partly replaced by in-house unions, actionswhich set the state’s agenda for future ER policy. These moves were followedby the pursuit of an ideological and structural strategy to incorporate the Malayworking class into the state-capital interest.

Since the early 1980s the state has attempted to distance workers from theprinciples of western pluralist models by emphasising so-called Asian values ofloyalty, hard work and docility, as articulated by Prime Minister Mahathir andhis promotion of the ‘Look East’ policy of the 1980s (Wad and Jomo 1994).This stress on the need for an enterprise and work consciousness was aimednot only at enhancing productivity and reducing labour costs, but also atmeeting the potential challenge from below arising from the growth of aMalay working class. As part of the policy the state attempted to undermine amass class-based unionism by promoting in-house unions and enterpriseconsciousness in a non-political business unionism model (Wad and Jomo 1994;Kuruvilla and Arudsothy 1995; Bhopal and Rowley 2002).

At a macro-level the state invoked notions of the national interest toundermine unionism. Indeed, in the 1980s the government sought toundermine the central union leadership for supporting opposition parties andpolicies. The unions, with links with political opponents,7 were accused offailing to credit the achievements of the Malay elite in advancing the economicwell-being of the Malay masses. Public attacks accused labour leaders of beinganti-nation and anti-democratic and, therefore, anti-Malay. Underlying the


7 The acting president of the MTUC was forced by government pressure to choose between his official involvement as supreme council member of the opposition party Semangat’46 and his MTUC position. The media and government conducted a campaign on the issue of trade union and opposition party links during 1992.




strength of this reaction were issues about defining who the guardians of theMalay interests were, and about what the Malay interest was. For instance, inthe context of a wider emergent defence regarding the debate about Asiandemocracy, the Minister of Human Resources warned ASEAN members tobe watchful of western unions which were attempting to extend influence inAsian labour movements to destabilise ER and impose labour practices whichwere unsuitable in Asian contexts. This East–West conflict was reflected in aNew Straits Times (1993) editorial:

Trade union leaders no longer listen to voices [of workers]... pay no heed to their need for leadership... These leaders... warble and yodel oninternational platforms to besmirch the government... [they turn]... a blindeye to the nations achievement in protecting the labour force. Yet it hasbeen a trend in developed countries for unionists to hammer the rulingparty... In such countries the ‘workers versus vampire like ruling elite’mind set was responsible for the conversion of the labour movement intopolitical parties. But surely such a trend has no legitimacy in a political and socio-economic climate that protects and promotes workers’ rights and well being.

Such a position enabled the government to publicly attack and underminethose elements of the movement deemed oppositional. These attacks were partof the attempt to fragment the labour movement through, for instance, spon-sorship of the alternative MLO (1988) on account of the MTUC’s increasingcriticism of government policy and involvement with oppositional parties(Interview 1993).

The light on the horizon – the emerging Malay era?

Since 1996 the state appealed to the trade union movement to become a partnerin the private sector driven concept of ‘Malaysia Inc.’ (Star 1996a). Thecondition that unions accept a business orientation in the workplace and assistin attracting FDI was increasingly accepted by the MTUC. Simultaneously,the state continued to attack union leaders for tarnishing the country’s image(Star 1996b) and while the MTUC was portrayed as less confrontational,conflicts with the state were personalised (Interview MTUC 2000, HSSWU2000 inter alia). A number of factors may account for such personalism. TheMTUC came under increasing pressure as a result of its leaders’ associationswith the opposition, which was gathering pace from the early 1980s. TheMTUC de facto aligned itself with the breakaway Semangat’46 and the DAP(Interview MTUC 1993). The MTUC’s oppositional stance resulted in a stateoffensive not only prosecuting and publicly attacking union leaders, but alsobypassing the MTUC in national forums in favour of the MLO, seen as anarm of the ruling BN.





Labour and capital intra-ethnic tensions

The notion of ethnic identity and Malay labour issues and decentralisationof ER and trade union structures are related in the new context in light of theroot and branch structure and perception of the UMNO as the most powerfulrepresentative and advocate of the Malay interest. Labour leaders use localUMNO leaders to attempt to resolve differences with management, with theimplication that labour issues are channelled into political processes, whichstrengthens political institutions at the expense of labour institutions (Bhopal2000). However, the UMNO also represents business interests, while at amicro-, workplace level, union solidarity has been fractured by appeals toethnic closure based on Malay identity, interest and cultural practices (Casparez1998; Smith 1994b; Bhopal and Rowley 2002). Some MNCs are reportedlyrecruiting senior UMNO activists to posts as human resource managers intheir attempts to counter union organising on the basis of Malay identitypolitics (Interview 2000).

Changing ethnic composition means the state cannot continue to ignorethe labour movement by using the ethnic card to marginalise opposition. Staterecognition of this is indicated by the Minister of Human Resources advisingthe MLO to dissolve itself and join the MTUC in 1996–97 (Interviews 1999).This recommedation was prompted not only by the failure of the MLO toundermine the MTUC, but also by potential internal reconfiguration of thebalance of forces within the MTUC itself. In 1994 the position of ZainalRampak as MTUC’s Malay president was under threat from more opposi-tional and leftist activists. He resigned from Semangat’46 and was wooed byAnwar Ibrahim to join the UMNO (Interviews, various 2000). The re-entry ofthe MLO consolidated and enhanced Zainal Rampak’s support and enabledhim to retain control of the MTUC and advance his developing vision for theMalaysian labour movement.

We conclude that the trajectory of the Malaysian labour movement isdriven by factions that see the emerging future government–labour movementrelationship in the context of ethnic solidarity with a pluralist flavour, but thatsuch a strategy is problematic owing to the capital interests inherent in the state.

While state direction of an ethno-development strategy (underpinned by affir-mative action) resulted in the spread of opportunities for Malay waged work,it also produced the growth of a Malay business class who were part of thenetworks of different political factions. This development enabled politiciansto distribute economic opportunities and thereby sponsor their particularbusiness support, with those closest to the incumbent UMNO gaining most(Gomez 1991; Munro-Kua 1996). The resulting ambiguous boundary betweengovernment, party and economic interests created a new dynamic in Malaysia’spolitical economy (Bowie 1994) as intra-Malay, inter-class economic inequalitygrew. The divisions have been growing between wealthy and poor, public





sector professionals and business people, and the politically included andexcluded business class. From the mid-1990s concern has been expressed,largely by the urban Malay professional and middle classes (teachers, civilservants, etc.), over ‘political business’, with fortunes amassed from sharepurchases and business links. Activities noted include those between politi-cians and the head of the airline and industrial conglomerate, TRI (Economist2002). Politicians’ business dealings have exacerbated concern (Jomo 1989;Gomez and Jomo 1997), with increasing discussion in the UMNO’s generalassembly. While these factors did little for regime legitimacy, they did notundermine it, with full employment and growth, wages and job opportunitiesfor Malays in particular, and others in general, continuing. However, as recentevents indicate, they are a potential source of intra-ethnic Malay disunity andtension both within and between the various classes.

The Malaysian labour force emerged relatively unscathed from the AsianCrisis, which together with the attribution of the crisis to ‘foreigners’,mitigated the need and potential for the labour movement to mobilise.However, the crisis gave rise to a political challenge to the ruling faction withinUMNO, as reflected in the conflict between Anwar Ibrahim (ex-FinanceMinister and Deputy Prime Minister) and Mahathir Mohamad (PrimeMinister). The conflict culminated in the former’s dismissal, arrest and impris-onment, and formation of an alternative party, Keadilan (led by his wife).

Such developments have the potential to fracture ethnic allegiances to thecentre by creating intra-ethnic political competition. Implicitly, such divisioncalls into question the notion of Malay ethnic and cultural unity and associ-ated Malay political and economic advancement. This challenge to the UMNOwas spearheaded by a coalition of oppositional parties with which unionactivists were attached, including the MTUC president. Anwar Ibrahim haddeveloped widespread grassroots Malay support and a broad constituencyamong the labour movement and other groups without access to the increas-ingly centralised and small network of dominant politicians and their businessassociates (Gomez, pers. comm; Interviews 1999). Intra-Malay competition hadagain created internal fragmentation and division and threatened in-groupsolidarity, although the main threat to the UMNO was at its leadership levelrather than as the institutionalised political form (Ibrahim 1998).

While the MTUC’s Malay president asserts commitment to workeradvancement, in the context of Malay proletarianisation this has increasinglybecome Malay worker advancement, indicated by his 1996 UMNO applica-tion (personally handled by Anwar Ibrahim and passed to the prime minister)(Interview: various 1999, 2000). With Zainal Rampak’s membership of theUMNO, senatorship (recommended by Anwar Ibrahim), and appointment tothe National Economic Advisory Committee, there has been increasingconcern within MTUC ranks over incorporation into the government. This isparticularly pertinent given his previous and longstanding attachment to theopposition and personification as the union voice of Malaysian workers.





In response, since 1997 some believe there is a possibility of gainingconcessions within government as internal fractures open up and politicalcompromises are sought. The ethnic factor is not insignificant in this shift,although bounded by the MTUC president’s commitment to an ER based onpluralism. Within the MTUC it is felt that such thinking is marginalisingopponents with attempts to fill the MTUC and union movement with newMalay trade unionists. As one union activist reported, the Indian generalsecretary ‘is the last remnant of Indian influence in the movement’ (Interviews2000). In the last MTUC elections it was felt that the president ‘wanted to pushaway all the Indians … [however] … he needed [the general secretary] becausehe was able to bring a lot of the Indian delegates into Zainal’s camp, but theIndians are feeling very much pushed out’ (Interview 2000). This situationappears ongoing to date (Interviews, various 2004).

In 1996, some two weeks after the prime minister expressed regret thatthe labour movement had not entered into the partnership implied in thenotion of ‘Malaysia Inc.’ (Star 1996a), he offered to include union representa-tives in trade missions if they promoted Malaysia. In the meantime, theminister for Human Resources publicly accused the MTUC’s Indian generalsecretary of criticising the government on international platforms, implicatinghim and his allies as critical opponents. Such a response indicates the signifi-cance of personalities and ethnicities in state–trade union relations. Accordingto the general secretary, the minister for Human Resources:

was trying to say that the MTUC is all right, the leaders are all right,except this one person … [it]… could be he wanted to try to create a kindof racial dissension … the government always likes to say the ethnicIndians are doing this, the ethnic Chinese are doing that, the Malays are all right. They always tried to create this kind of feeling. I think they were trying to separate us, and hoping that when the elections came thedelegates would reject [me] … (Interviews 2000).

However, some would deny the MTUC is being led down the road of co-optation to minimise the threat from labour, believing worker advancementcan only be achieved through, rather than outside, the structures of theUMNO. Some argue the labour movement is moving towards a Singaporemodel of symbiotic ties between peak labour and the ruling party.8 While thisdevelopment need not be viewed in ethnic terms but can be seen as a recon-figuration of the interplay between class and ethnicity, it may be that ZainalRampak speaks from a particular place, out of a particular history, out of a


8 Singaporean ER is based around a symbiotic relationship between organised labour and the ruling People’s Action party (PAP). Members of each hold formal positions in the other organisation. They both recognise Singapore’s dependence on FDI and attempt to co-operate to ensure economic viability and prosperity. The role of trade unions is defined




particular experience, a particular culture without being constrained by thatposition (Hall in Grossberg 1996). However, such a position, while openingaccess directly to the prime minister, seemed to result only in concessions fromthe labour movement. For instance, the MTUC agreed to reverse oppositionto in-house unions (New Straits Times 1997) and decided against issuing alabour manifesto in the 1999 elections, the result of behind-the-scenes mobil-isation by Zainal Rampak. As one trade unionist said, ‘The outcome wasorchestrated by Zainal. He mobilised his supporters to … block the manifesto.More than 80 members were present, double than we normally have … somewho have never attended a meeting before’ (Interviews 1999). Yet, some 17unions independently issued a manifesto, indicating division within themovement over tactics to advance the labour and political interests of workers.Indeed, de facto political involvement is exemplified by a number of tradeunions in 1999 presenting joint demands to the opposition as a condition oftheir support, resulting in inclusion of a number of them in programs.

Despite the changing context of labour politics in Malaysia’s ethno-economy, the MTUC president continues to express fears of splits if any partic-ular coalition of parties is favoured. He continues to prefer individual actioninstead, with a belief that he can gain concessions within the UMNO as thebalance of forces re-configure. Supporters believe entry into the governmentaccords him ‘greater respect when meeting Ministers’ (Interviews 2000),enhancing potential to influence from within. The then prime minister –Mahathir – in the meantime is provided unprecedented access in case theMTUC president leads the labour movement into the opposition camp. Oneresult was that prime minister’s promise to give serious consideration to long-standing issues regarding the minimum wage and retrenchment funds,although the government subsequently distanced itself from the former andrejected the latter (partly due to employer opposition). Should the moderatestance provide returns, this would advance the labour interest after many yearsof state hostility, and contribute to sustaining the organisational unity of theUMNO as a representative of Malay interests. If labour cannot leverageconcessions, the MTUC would have lost an opportunity to fully exploit theopportunity of advancing the labour interest, which in the case of Malaysiagoes beyond distribution, arguably to issues of democracy and social justice.However, by so doing and awaiting what are uncertain outcomes, labourleaders may have unwittingly elevated the Malay interest as represented in thefear of the consequences of a intra-Malay split represented by a fracturing ofthe UMNO.


as promoting good ER between workers and employers; improving working conditions; and improving productivity for the mutual benefit of workers, employers, and the country. However, such a model assumes a common identity and interest between the state and labour, which in multi-ethnic Malaysia may be more difficult to achieve.




We now return to our set of three interrelated propositions. First, states, evendependent ones, have choices in labour strategies, and these are not determin-istic but contingent on the interplay and perceived priorities in the order ofthe political, economic and social configuration. The case of Malaysia demon-strates this. Valenzuela (1992) asserts that states could adopt at least three pro-capital labour strategies, reflecting labour and political considerations. Eachstrategy gives rise to its own particular tensions, which provide potentialopportunities for action. Ethnicity is a significant factor in those societies whereit plays an implicit or explicit part in the political and cultural discourse.Therefore, while states can sponsor and incorporate labour movements inattempts to create co-operative and populist movements accepted by workers,such a strategy is only possible where there is ethnic harmony or co-incidence,or absence of a differentiating ethnic political or cultural discourse. Even inthese circumstances such a strategy may become unstable where concessionmaking is undermined by the contradictions between capital, labour and thestate. And additional difficulties could arise where any of these contradictionsmight have a differential ethnic impact.

Second, these labour strategies are not just driven by capital: labour has arole not only as a voice, but potentially as a political actor itself. Support forthis notion is more ambiguous and less clear-cut in the case of Malaysia. Thevoice of labour appears to be that of the labour elite in a political discourse thatby virtue of its ethnic basis has waxed and waned, to provide constraints aswell as enable opportunities. Nevertheless, the changing structure of theMalaysian urban working class has given rise to a potentially new politics oflabour where, unable to accommodate unions, the state may attempt to incor-porate peak labour movements to control autonomous action. This may bepossible only if creation of the following situations is successful. First, theremust be a coincidence of ethnicity between the peak of the labour movement,its members and the state. Second, union leadership must have sufficientpower to stop autonomous action by subordinate levels in the labourmovement, whose hierarchy (which, due to the ethnic segmentation of labourwill contain different ethnic groups) invoke other aspects of their identity.Without the former, questions of union legitimacy and representativeness maygive rise to challenges to official labour movements, and, without the latter,union fragmentation may arise on ethnic and other identity grounds.

Third, given the significance of subjectivities, not just in plural multi-ethnic societies but in mono-ethnic ones also, the role of ethnicity is important,although ethnicity can also be internally fractured, as in the Malaysian case.Where unbridgeable differences between political parties and labourmovements exist, policies of control based on fragmentation and decentralisa-tion are used. This would assume that ethnic identity as a means of controllingtrade unions has been used negatively (i.e. unions as the ethnic ‘other’) or that


Discussion




the state is attempting to deem unions as antithetical to the ethno-developmentproject. Such attempts to expose union movements to the market mechanismare associated with attempts to weaken power by constraining and limitingability to organise and mobilise via restrictive legislation, decentralisation andstructures of mediation (i.e. forms of media). In this case it is clear that the aimis not only to prevent labour movements from exerting economic pressure, butalso to restrain them from becoming a platform for political opposition to theregime.

In sum, we have demonstrated that in the case of Malaysia, labour hasbeen subject to several strategies which have changed over time as the political,economic and social context evolved. This context, however, is simply an order,and struggles have existed over the (re)ordering of Malaysia’s politicaleconomy, and to this end the different actors have utilised a variety ofresources, from the legislative to the symbolic. There are not necessarily anyhard and fast determinate rules as actors make decisions about the content andtheir position towards the preferred order.

Ethnicity has often been underplayed in much analysis. Yet, it has been anenduring phenomenon in Malaysia and continues to impact upon ER. Linksbetween labour leaders and the ruling and opposition parties, together withthe ethnic division of labour, historically provided many opportunities for frag-mentation and division and few for cross- and intra-ethnic labour solidarity.However, economic development and concomitant change in the ethniccomposition of the labour force is raising new issues of intra-ethnic difference.Recent perceptions of injustice and regime illegitimacy, which cut into thepost-NEP Malay consensus, are not being translated into political action as aresult of some leaders’ choices within the labour movement thereby forgoingthe opportunity to raise issues of class to challenge the dominant ethnic politicaldiscourse.

However, working with the UMNO and maintaining this perceivedvalued institution, or working outside and possibly undermining it, is thechoice that different labour factions have faced. The consequence of theirdecisions may be that while the political institution has survived, the labourmovements’ mutual trust and solidarity have been eroded, which, given thegrowth of the Malay working class and its dominance of the labour movement,portends greater and more explicit political division within it. Defeat of theoppositional elements could result in a Singapore model. Perhaps we await theMalaysian model, or a model based on multi-ethnic plural societies committedto both capitalist and nationalist development. In the case of Malaysia, nationalinterest is subject to contestation on material and symbolic grounds and in thissense the final chapter has not yet been written.


Conclusion




Chris Rowley (DPhil, Oxford; GradCIPD) is professor of human resource management at the Faculty of

Management, Cass Business School, City University, London, UK. He is the editor of the Asia Pacific

Business Review and also the series editor for Asian Studies: Contemporary Issues and Trends. He has

published over 90 articles, 12 books and 70 chapters and entries. Included in his recent grants were

ones from the British Academy (2003, 2004 ) and ESRC/AIM (2004) for research in Asia.

Mhinder Bhopal is senior lecturer in employment studies at London Metropolitan University. He has

published a number of articles on ethnicity, trade unions and multinationals in Malaysia, and was co-

author of ASEAN business in crisis. He received a Bristish Academy grant (2003) to investigate Korean

multinationals in Malaysia.

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