Government Involvement in Industrial Relation to Attain Employee Work Engagement in East Malaysia

Government Involvement in Industrial Relation to Attain Employee Work Engagement in East Malaysia

Elizabeth Caroline Augustine*, Nur Aida Kipli, Kuldip Singh

Faculty of Administrative Science and Policy Studies, Universiti Teknologi MARA (UiTM), Sarawak Branch, 93400, Sarawak Malaysia,

*Corresponding Author

DOI: https://dx.doi.org/10.47772/IJRISS.2024.8100284

Received: 16 October 2024; Revised: 25 October 2024; Accepted: 26 October 2024; Published: 25 November 2024

ABSTRACT

The existence of government in a country is for the betterment of the society. Therefore, the government is also responsible for industrial relations affairs in a country. Thus, this paper attempt to verify and validate the extend of government’s effectiveness in playing its roles in the country’s industrial relations to attain employee work engagement. An organization with employees who are engaged in their work aid the organization to increase productivity and boosts profitability. A study was conducted among registered managerial officials and trade union officials of unionized private sector organizations in East Malaysia. 104 managerial officials and trade union officials responded to an online survey. The study revealed that the government through its involvement as legislator, administrator, and intermediary had helped in shaping not just a harmonious but a quality industrial relations and contribute to employee work engagement attainment. It suggested that future research to include government involvement in assessing industrial relations quality.

Keywords: Government Involvement; Industrial Relations; Industrial Relations Quality; Legislator; Administrator; Intermediation,

INTRODUCTION

Government exist for the betterment of society (Bornstein 1980). However, much has been debated about the government’s involvement in the country’s industrial relations affairs. The involvement of the government in the country’s industrial relations has raise the interest and concern of several scholars (Ganesan & Ling, 2014; Idrus, 2001; Jomo, 2012; Kumar, Lucio & Rose, 2013; Mansaray, 2022; Parasuraman, Kelly & Rathakrishnan, 2021; Parasuraman & Schwimbersky, 2005; Todd & Peetz, 2001). There are others though who think otherwise (Aminuddin, 2020; Wad, 1997).

Ganesan and Ling (2014) state that the Malaysian government has been criticized in many studies for its interference in the country’s industrial relations. Jomo (2012) and Idrus (2001) perceive the Malaysian government plays a more dominant role in the country’s industrial relations. In fact, Jomo (2012) claimed that Malaysian industrial relations is overtly state control and this may complicate rather than to ease. Parasuraman and Schwimbersky (2005) highlighted that greater state-control industrial relations will create a conflictual pattern rather than a cooperative one. Todd and Peetz (2001) too had characterized Malaysian industrial relations as extensive state control.

Even so, according to Kumar, Lucio, and Rose (2013) the Malaysian legal system especially its employment legislations is weak in supporting the country’s industrial relations. Some even claim that involvement of government in industrial relations will make things more complicated. On the other hand, Wad (1997) claims that Malaysia achieves industrial relations peace through government involvement via labor legislations, administrative, conciliation and arbitration mechanism. Government influences the relationship by introducing rules and regulations and code to foster industrial harmony. Thus, one may wonder whether government involvement will foster and enhance or otherwise the quality of industrial relations in the country. Much has been said about Malaysian government involvement in the country’s industrial relations affair and there are some unfavorable although Bornstein (1980) stressed that government exists for the betterment of the society.

Despite of years scholars like Ganesan and Ling (2014), Idrus (2001), Jomo (2012), Kumar, Lucio, and Rose (2013), Mansaray (2022), Parasuraman, Kelly, and Rathakrishnan (2021), Parasuraman and Schwimbersky (2005), and Todd and Peetz (2001) had identified government involvement in the country’s industrial relations is unfavorable, not much of changes were seen to date. Despite of Markey (2005) highlighted that a government played a vital role in a country’s industrial relations, there are scholars (Ahmad, Mohd, Syed, Bee, Salleh, & Gaong, 2023; Bennett, Saundry, & Fisher, 2020; Wad, 2019; Jomo, 2019; Loganathan, Sin, & Ganesan, 2022; Mansaray, 2022) who still question the government effectiveness in aid achieving sound industrial relations. Hence, this paper attempts to verify and validate the extend of government’s effectiveness in playing its roles in the country’s industrial relations in attaining employee work engagement.

LITERATURE REVIEW

Industrial Relations in Malaysia

Aminuddin (2020) agreed with Dunlop (1958) that most countries’ industrial relations structure tripartite, where it consists of three parties, where they are the employer, the employees, and the government. She further explains that in Malaysia context, the employers are commonly represented by the management of the organization, while the employees are represented by their trade unions and when dispute arise between these two parties, the government will play its role as third party assisting in resolving their indifferences. Thus, making them the main players in Malaysia’s industrial relations. Wu (1995) in the opinion the employer and the employee are the core players in industrial relations and supposedly most decisions are made by them based on mutual understanding. The Malaysia industrial relations is mostly regulated through employment-related legislations especially like the Industrial Relations Act 1967 and the Employment Act 1955 for Peninsular Malaysia, Sabah Labour Ordinance for Sabah and Sarawak Labour Ordinance which also supplemented by the Trade Union Act 1959. The MOHR represents the government to govern industrial relations in the country in which among its core activity is enforcing the Trade Union Act 1959 (TUA), Industrial Relations Act 1967 (IRA), and Employment Act 1955 (EA) by translating them into actual action and when necessary, takes corrective action. A document known as the Code of Conduct Industrial Harmony 1975 provides a guideline particularly for the employers and the employees on achieving greater industrial relations harmony. In fact, the Industrial Relations Acts 1967, the Trade Unions Act 1959 and the Employment Act 1955 as well as the Sabah Labour Ordinance and Sarawak Labour Ordinance are referred to and reflected in the Code of Conduct for Industrial Harmony. The code outlines how each party should behave and areas in which they should cooperate to ensure industrial ethics and fair labor practice. The CCIH was transpired in the NLAC. NLAC is an advisory body where the tripartite discussion takes place. Tripartite discussion is a practice where the employers, the unions representing the employees and the government will sit together to decide and agree on necessary laws enacted or amendments to the laws. In Malaysia, the tripartite discussion will take place before any law is drafted, presented, enacted, or amended in Parliament.

The Industrial Relations Act provided provisions to prevent the victimization of employees in the workplace. For this purpose, an employer needs to comply with the prohibitions as stated in Section 5 of the Act. The provision indicates that the employer or its trade union or even anyone who acts on behalf of an employer or its trade union should avoid certain victimization practices towards employees. Despite of provisions provided in the Industrial Relations Act, 1967 to avoid employees being victimized by their employer and the Code of Conduct, 1975 which provide guideline towards harmony industrial relations, trade disputes cause by many reason still occurred as shown in Table 1. There are a few approaches to settle trade disputes as stated in the Industrial Relations Act, 1967. Under the industrial relations act, 1967 the process of resolving trade disputes is through bilateral negotiation between employer and employees, conciliation by the industrial relations department and adjudication by the industrial court.

Table 1: Disputes Referred to the Industrial Court

Source: Industrial Court, Malaysia (2024).

The Malaysian industrial relations system emphasizes the concept of self-government in industry where both parties are encouraged to resolve their disputes by direct negotiation whereby employers and trade unions negotiate and settle their differences without any intervention. Should the negotiation fail, the parties may refer to the Director General of the Department of Industrial Relation for conciliation. In the event of a deadlock either party may report the dispute to the department upon which conciliation proceedings may be initiated. In fact, conciliation has been the most effective method of resolving disputes. The process of conciliation involves a series of meetings conducted either jointly or separately. Where the matter fails to be resolved through conciliation the dispute is then referred to the Minister of Human Resources who will exercise his discretionary powers to refer the dispute to the industrial court or otherwise. When a reference is made to industrial court, the court will adjudicate the dispute.
Bamber and Leggett (2001), de Silva (1998), and Kuruvilla and Erickson (2002) stated that in some Asian countries, their respective governments play an important role in shaping their countries’ industrial relations. The involvement of government in the country’s industrial relation is the vital feature of Malaysian industrial relations (Idrus, 2001. Literatures on Malaysian industrial relations reveal that the Malaysian government have increasingly played a dominant role in the development of industrial relations in the country. Some commented this is bad. While some claimed that this is due to the fact that the government seen a more harmonious industrial relations can influence Malaysia in its quest to a fully developed and industrialized country by the year 2020 at the latest. Several commented the government of Malaysia has given high priority on economic growth as an instrument to achieve the status of a developed country (Kuruvilla, 1995; Parasuraman & Schwimbersky, 2005; Todd & Peetz, 2001). This is true as the Ministry of Human Resource website indicate harmonious industrial relations not only will determine the country’s competitiveness ranking in the National Competitiveness Ranking but also in the Global Competitiveness Yearbook Report, where these are very important to attract foreign investors and strengthen the country’s economy (https://jpp.mohr.gov.my/).

Earlier researchers identified economic considerations have been significant in Malaysia industrial relations (Jomo, 2012; Kuruvilla, 1995). This has been a consistent important factor that has influenced the role of the government in its industrial relations (Kuruvilla, 1996). Government restriction pertaining to industrial relations on employees in Malaysia is to ensure the sustainability of its economic development and to make national economic conditions favourable for developing Export-oriented industrialization (EOI) strategies (Parasuraman & Schwimbersky, 2005). In general, the government enforces stringent requirement and systematically tightened labour rules and regulations in the interest of keeping peace to secure “cost-containment measures” for economic growth purpose particularly for export sector (Kuruvilla, 1995). Jomo (2012) claimed that the government was involved in Malaysian industrial relations since 1950s in the form of labour laws and policies for peace keeping purposes and to promote industrialization. According to him too, the government even tighten up the country’s labour laws in 1980 to promote foreign investment to boost Malaysia economic growth. Todd and Peetz (2001) acknowledge the Malaysian government have been highly involved in the country’s industrial relations to attract investors. They further explained that Malaysia relied heavily on foreign investment for its economic success.
In Malaysia, other than being an employer and a participant, the government also plays the roles as legislator through the Parliament (Maimunah, 2020) to enact, amend and abolish employment legislations and policies. As the legislator, the government legislates or enacts law concerning industrial relations through the Parliament, for example, Trade Unions Act 1959. Ayadurai (1998) states that the Malaysian government involvement takes many forms which reflected in formulation, amendment and abolishment of industrial relations policies and legislations such as the Industrial Relations Act 1967, The Trade Union 1959, The Employment Act 1955, The Sarawak Labour Ordinance and The Sabah Labour Ordinance. In Malaysia, the Industrial Relations Acts 1967, the Trade Unions Act 1959 and the Employment Act 1955 as well as the Sabah and Sarawak Labour Ordinances are among legislations that play an important role in its industrial relations. The Industrial Relations Acts 1967 governs employer-union relations and it applies throughout Malaysia (Ayadurai 1998). The Act regulates the relations between employers and employees and their unions as well as laying down rules to help prevent and settle disputes particular between employers and employees to minimize conflict, thus ensuring peaceful industrial relations as far as possible (Maimunah, 2016; Wu, 1995). The Malaysian industrial relations system operates within the legal framework of the Act (Wu, 1995). The Act is one of the mechanisms used to maintain harmony industrial relations in the country (Ayadurai, 1998). While the Employment Act 1955 as well as the Sabah and Sarawak Labour Ordinances works in the same manner although there is minimal difference among them in terms of provisions. These legislations govern employer-employee relations (Ayadurai, 1998). They provide minimum benefits for employees and lay down provisions to protect employees from exploitation but at the same time, it also establishes certain rights for the employers (Maimunah, 2020). The Trade Unions Act 1959 main existence is to control the activities of employee unions (Maimunah, 2020) by regulating trade unions’ composition and memberships, and also detailing the rights, power, and responsibilities of trade unions (Ayadurai, 1998). Trade unions are expected and required to follow rules and regulations laid down in the Act so that they can develop in an orderly and peaceful manner (Maimunah, 2020). The Trade Unions Act 1959 restricted the membership of trade unions geographically where employees in Peninsular Malaysia can only join unions whose members work in Peninsular Malaysia and this applies the same to employees who work in East Malaysia (Maimunah, 2020 & Ayadurai, 1998). However, the Act applies throughout the country (Ayadurai, 1998). A few claimed that Malaysian industrial relations is highly associated with workplace managerial prerogative and the employment legislations enacted seem to protect the employers more than the employees (Arudsothy & Littler, 1993; Ariffin, 1997; Jomo & Todd, 1994).

The Malaysian government is also responsible to administer and oversee the industrial relations system in the country (Maimunah, 2020). The government performs its role as administrator through the Ministry of Human Resources (MOHR) where among its core activity is enforcing employment laws by translating written laws into actual action and taking corrective action when necessary (Maimunah, 2020). Maimunah (2020) claims that the Malaysian government plays an important role as an intermediary in the process adopted in the industrial court through the conciliation process in the Industrial Relations Department. In the Malaysian industrial relations context, it is crucial for the government to be involved to moderate the conflict between employees and employers. Yarrington, Townsend, and Brown (2007) acknowledged that to a certain extent, the government does have a positive influence on industrial relations especially when conflict may tend to occur and it will act as a peacemaker. Since the management and union interest is rather conflictual in nature (Maimunah, 2020; Sharma, 1991), hence they will seek the assistance of the government should there is any unresolved dispute between them (Ayadurai, 1998; Maimunah, 2020; Wu, 1995). It seems that the interference of the government is crucial to moderate their conflict. The Malaysian government does play quite a role and involve much in the country’s industrial relations. However, there is still an argument about whether government involvement in industrial relations particularly in Malaysia is good or bad.

Harmonious and Quality Industrial Relations

Dastmaltchian, Blyton, and Adamson (1989) state that from the review of the literature, many elements can be identified to reflect sound industrial relations. Several industrial relations scholar had adopted Dastmaltchian at al., (1989) in their studies. In Malaysia, the Industrial Relations Act 1967, the Code of Conduct Industrial Harmony 1975, and the Malaysian industrial relations principles are very synonyms with sound industrial relations. They highlighted several criteria for fostering and enhancing sound industrial relations. Augustine, Kipli, and Singh (2023) identified seven factors commonly used to assess industrial relations. They are union legitimacy, employment policy, communication, consultation, employee involvement and participation, negotiation, and conflict management approach. According to Augustine at al. (2023) communication. consultation, and negotiation are sufficient to assess industrial relations.

Employee Work Engagement

Schaufeli and Salanova (2007) define work engagement as the work-related mood that is associated with positive attitudes towards work, the organization, and high performance that is characterized by vigor, dedication, and absorption. Although there are different views about work engagement, most scholars agree that engaged employees have high levels of energy and identify they are strongly associated with their work. (Kahn, 1990) revealed that engaged workers put much effort into their work because they express themselves physically, cognitively, emotionally, and mentally during role performances. Engagement is assumed to produce positive outcomes, both at the individual level, that is personal growth and development as well as at the organizational level i.e performance quality (Bakker & Demerouti, 2008). Utrecht Work Engagement Scale (Schaufeli & Bakker, in press; Schaufeli et al., 2002; UWES) thus so far has been the most often used instrument to measure work engagement. UWES was developed by Schaufeli, Bakker, and Salanova (2006). It has been validated in several countries across the world, making UWES a viable instrument to measure work engagement.

METHODOLOGY

The study was conducted in East Malaysia to determine whether government involvement enhances the quality of industrial relations and influence employee work engagement. East Malaysia was chosen because it has attained the highest industrial harmony index (IHI) in the first two years (2017-2018) of IHI implementation. All unionized private sector organizations in East Malaysia were selected for the purpose of the study. Online surveys were conducted among the managerial officials and trade union officials of the targeted organizations. The administration of the online survey was assisted by the Department of Trade Union Affairs in East Malaysia. There were 104 respondents responded to the online survey. Five-point Likert scale was employed to measure the respondents’ views where ‘1’ indicating strongly disagree, ‘2’ indicating disagree, ‘3’ indicating neither disagree nor agree, ‘4’ indicating agree, and lastly 5 indicating strongly agree. Statistical Package for the Social Sciences (SPSS) version 26 was used to perform Pearson correlation analysis, multi-regression analysis, Sobel test,

FINDINGS AND DISCUSSION

From the survey, as illustrated in Table 2, the government effectively playing its every single role in the country’s industrial relations with their respective mean scores are close to 4. This is the opposite of the claim made by Jomo (2012) that a government of a country may complicate its industrial relations when the government overtly controls it. Concern raised by Ganesan and Ling (2014) over the interference of the government in the country’s industrial relations has proven by the study is otherwise and obviously had benefited the country in promoting, fostering, and maintaining not only a harmonious but a quality industrial relations in Malaysia. Claim by a few (Arudsothy & Littler, 1993; Ariffin, 1997; Jomo & Todd, 1994) that Malaysian industrial relations is highly associated with managerial prerogative at the workplace, and the employment legislation enacted seems to protect the employers more than the employees are also lack of proof.

Table 2 also shows that the government is most effective playing its role as the legislator (mean 3.98). Ayadurai (1998) justified that employment legislations and policies are among the mechanisms used to maintain harmonious industrial relations. As claimed by Maimunah (2020) the rules and regulations laid down in the employment legislation and employment policies help in developing orderly and peaceful industrial relations in the country. Maimunah, (2020) and Wu (1995) claimed that the employment legislation and policies which were formulated and enacted proved to have not only assisted in preventing and resolving disputes but had also minimized conflict, thus promoting a harmonious and quality industrial relations as far as possible. Thus, claim made by Kumar, Lucio, and Rose (2013) that the Malaysian employment legislations is weak in supporting the country’s industrial relations is dismissed.

Table 2: Government Involvement in Malaysian Industrial Relations

Table 3, Table 4, and Table 6 exhibit the analyses of the effectiveness of government involvement in industrial relations in attaining employee work engagement. In Table 3, the analysis was conducted using Pearson correlation. The r-value in Model 1 where government involvement is excluded in the model is 0.78. However, when government involvement is included in Model 2, its r-value increases to 0.81, and its significance is maintained at p = 0.01. This proves that government is effective in playing its role in the country’s industrial relations.

Table 3: Comparison of r-value with and Without Government Involvement in Model of Industrial Relations

**. Correlation is significant at the 0.01 level (2-tailed).

While Table 4 shows analysis conducted employing multi-regression. The R Square value is 0.642 in Model 1 where government involvement is excluded in the model. However, when government involvement is included in Model 2, its R Square value increases to 0.652, and its significance is maintained at p = 0.01. Again, this proves that government is effective in playing its role in the country’s industrial relations.

Table 4: Comparison of R Square Value in Multi-regression Analysis with and without Government Involvement in Industrial Relations in Relationships to Work Engagement

Table 5 analyses the effectiveness of government playing its roles in industrial relations to attain employee work engagement via Sobel Test. It shows that Sobel Test is more than 0.3, and p = 0.01. Sobel Z = 3.684, which is greater than 1.98. This proofs that government is very effective playing its roles as legislator, administrator and mediator in the country’s industrial relations in attaining employee work engagement.

Table 5: Effectiveness of Government in Industrial Relations to Attain Employee Work Engagement

These findings proofs that government is effectively playing its roles in the country’s industrial relations to attain more engaged employees in their work. Bamber and Leggett (2001), de Silva (1998), and Kuruvilla and Erickson (2002) stated that in some Asian countries, their respective governments play an important role in shaping their countries’ industrial relations. As claimed by Idrus (2001), government involvement is an important feature in the country’s industrial relations. While Kaufman (2004) said that the government plays an equal role as a key player in the country’s industrial relations. Maimunah (2020) states that the government will play its role as a third party assisting in resolving indifferences between employers and employees. These findings also prove claims made by (Ayadurai, 1998; Maimunah, 2020; Wu, 1995) are true where the management and the union will seek the assistance of the government should there is any unresolved dispute occur between them. It seems that the interference of the government is crucial to moderate their conflict.

It is revealed in the study that the government is most effective playing its role as a legislator in the country’s industrial relations. This finding supports the claim made by Maimunah (2020) that the government plays the role of a legislator through the Parliament and administrator through the Ministry of Human Resources in the country’s industrial relations. This is in line with Ayadurai’s (1998) claim that the Malaysian government’s involvement takes many forms which are reflected in the formulation of industrial relations policies and legislations such as the Industrial Relations Act 1967, The Trade Union 1959, The Employment Act 1955, The Sarawak Labour Ordinance and The Sabah Labour Ordinance. The findings of the study also support Maimunah’s (2020) statement that the government is responsible for administering and overseeing the industrial relations system in the country. It also proves what Wad (1997) claims are true about Malaysia achieving industrial relations peace through government involvement via labor legislations, administrative, conciliation, and arbitration mechanism.

Kuruvilla (1995) claims that industrial relations is one of many factors that contribute to a country’s economic growth. Studies were conducted in the United States of America, United Kingdom, Australia, Japan, Germany and Singapore (Dastmachian, Blyton & Adamson, 2014; Deery, Erwin & Iverson, 1999; Ostrowsky, 2005; Schappe, 1997; Yarrington, Townsend & Brown, 2007) justify the strategy and state of a country’s industrial relations is said to be capable to influence its economic growth. It is the responsibility of the country’s government to set the course of its industrial relations strategy. This means a country’s industrial relations strategy will shape the country’s industrial relations and the country’s state of industrial relations will then influence its economic growth. This is in accordance with the claim made by the Malaysian’s Ministry of Human Resource, that the state of industrial relations of a country will determine the country’s ranking in the World Competitiveness in Labor Relation to attract the interest of foreign investors to do business in the country for the benefit of the country’s economic progression and growth. Hence, it is the government’s responsibility to be involved in the country’s industrial relations to ensure the economic growth of the country, especially during a critical economic situation.

At the same time, the findings of this study about the government’s involvement in the country’s industrial relations refute Idrus (2001), Ganesan and Ling (2014), Jomo (2012), Parasuraman and Schwimbersky’s (2005), and Sharma (1991) views that greater state-control industrial relations will create a conflictual pattern rather than a cooperative one, which makes it less quality. Claims made by Besley and Burgess (2004), and Vedder and Gallaway (2002) that industrial relations have nothing to do with any aspect of organization development are also rebutted by the findings in the study.

CONCLUSION

Government involvement does provide aid to gain a harmonious and quality industrial relations in order to attain high employee work engagement. It positively mediates the relationships between industrial relations and employee work engagement. Hence, it is the government’s responsibility and business to be involved in the country’s industrial relations to ensure the economic growth of the country, especially during a critical economic situation like the COVID-19 pandemic. Overtly control by the government is necessary sometimes to ensure the progress of economic growth for the good of the society and country. In actual fact, government support can be included as one of the dimensions to assess the quality of industrial relations. It was also found that the Malaysian industrial relations structure is congruent and consistent with Dunlop’s (1958) theory, having three parties as the key players. Nevertheless, this study may not be presentative to Malaysia as it only include the East Malaysia region and not the whole country. Consequently, the result of this study can be considered incomplete. The accuracy of the results is less and may not be suitable to be applied to Malaysia in general. Therefore, it is highly recommended that future research include West Malaysia and the Federal Territories to make the study on industrial relation quality in the context of Malaysia in the future to be more reflective.

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