Campaign to Abolish Contract System in Public Sector
PSM begun to actively campaign to abolish contract system in the civil service since two years
ago. The contract system referred to here is when an employee works in a government premise /
building but his employer is a private and non-Government company. This is a type of
outsourcing practiced in the public sector. For example, a security guard works in a government
school, but his employer who pays his wages is a private company, and not the school
administration. This happens in all government premises such as schools, hospitals,
municipalities, courts, district offices, and in all state and federal administrative offices. The type
of work which is outsourced are security guards, cleaners, garbage collectors, gardeners, laundry
service and others. This contract system also exists in the private sector but PSM feels the
change should start from the Government sector where Government sets a good example before
abolishing this practice in the private sector too.
What is the disadvantage of this contract system?
1. These contract workers are usually employed for short term contracts such as 3
years, and often contracts will be renewed when new contractors take over. Every 3
years once the contract is renewed, the employee will be considered as a new
employee. Although the worker has worked for more than 10 years at a government
premise, the employee loses all benefits of the accumulated service period so far,
when a new contractor takes over.
2. Maintain a low salary. Each private contractor will always maintain the same
wages or lower than the old contractor. These contract workers do not get paid
according to their work experience. The reasons given are they become new workers
under each new contractor. This contract system makes poor workers poorer. Most
workers from the B40 (ie the lowest income households) became victims under this
3. These contract workers lose the minimum benefits specified in the Employment
Act 1955 such as annual leave, sick leave, and severance benefits. This is because
these benefits increase according to the length of service in a company. But when the
employment contractor is changed every 3 years, they loss this benefit. For example,
a cleaning worker at a hospital who has been working for more than 6 years, qualifies
for 16 days annual leave ( as she has worked for over 5 years ). But because she
would become a new employee under the contract system every 3 years , the
employee will not qualify for 16 days annual leave at any time at all in her long
4. Private companies often bid at a low rate in order to easily obtain government
tender. So, they usually take more profit than benefits that should go to the workers.
Most contract workers in the government sector do not have deduction for SOCSO,
EPF and SIP which are mandatory deductions. In addition, these private companies
also cheat while calculating overtime wages.
5. These contract workers do not have job security. When these contract workers
speak for their rights, private contractors take the easy way out by terminating these
workers. This is happening rampantly. Government contract workers also do not have
the right to establish trade unions because they are not permanent workers. The
worker loses his right to be an union member because of the short contract time
As contract workers in the government sector have lost all their rights and benefits as
employees, PSM has initiated a campaign to abolish the contract system in the government
sector. Below are our demands:
1. Stop the contract system in the public sector.
2. Upgrading all contract workers in government premises to government employee status –
Actually, before the 1980s, all government-owned workers, including cleaning and security
personnel, were government employees. Since the 1980s, during the time Dr. Mahatir Mohamad
was Prime Minister (also the present Prime Minister), the contract system began to be
established at government premises.
3. Resolve all cases of contract workers in public sector filed at the Labor Department or the
Industrial Relations Department.