'US Union Busting in Contemporary Malaysia: 1970-2000'

Mhinder Bhopal

(University of North London)






Malaysia has relied on attracting foreign direct investments and her industrial development has been dependent on multinationals, from mainly, America and Japan.  Malaysia, like other export-orientated industrializers, has been categorised as a 'dependent development regime' and associated with authoritarianism (see Jesudason, 1996; Munro-Kua, 1996). Unions have never been banned outright in post-independent Malaysia in what has been described as `controlled pluralism’ (Kuruvilla, 1995). The strategy, however, has not been evenly applied across sectors and additional controls on trade union activity and organization were placed in the export orientated sectors. In the 1970’s, special provisions relating to `pioneer industries’, which limited collective bargaining by workers and at times their freedom of association, were introduced as a means to minimize negative consequences for inward investment. This may seem to support the dependency thesis, where it has been argued that industrial relations in countries with an FDI based export orientated strategy based upon low skill, low value added and low cost labour gives rise to labour subordination (Bjorkman et al 1988).  Kuruvilla goes further to argue that shifts in industrialization policy to export orientated industrialization were accompanied by the Malaysian state’s general move from controlled pluralism to repression and exclusion during the late 1970’s (Kuruvilla, 1995).


The Malaysian state’s approach to trade unions has been particularly repressive in the electronics sector. This paper argues that the actual scope for repression is constrained by political considerations arising from the electoral process, factionalism and issues of maintaining `regime legitimacy’. Furthermore, a focus on state economic policy as the primary explanatory factor for its approach to industrial relations policy can overlook the influence of employer choice. The significance of political constraints on economic management of dependent economies needs to be considered together with the opportunities that this can provide for trade union counter mobilization. Indeed, this paper argues that, despite state concessions to unions in the electronics sector, it was resistance by American companies that led the state to be more oppressive to trade unions than it would otherwise have been. Furthermore, government withdrawal from its accommodation of the anti-unionism of US electronics capital has proved to be politically problematic, and it is this that may explain its policy to trade unions over the last twenty years.





In 1996 the Peninsular Malaysia population of 20 million consisted of 61 per cent Malays, 30 per cent Chinese and 8 per cent Indians and 1 per cent others (Gomez and Jomo, 1997). Ethnicity has been the prime organizing principle and basis of electoral mobilization and competition in Malaysia and this has resulted in the main incumbent and opposition parties being, largely, organized on an ethnic basis. In this context, parties purporting to be `multi-racial’ are perceived to be ethnically dominated resulting in the de-facto ethnicization and reinforcement of such a political discourse. Many of Malaysia's problems arise from the manner in which the multi-ethnic nature of the population has been utilized in the political discourse. Critical analysts have seen the discourse of ethnicity as functional in obscuring more fundamental structures of class domination and inter-ethnic elite accommodation (see, Hua Wu Yin, 1983; Yun Hing Ai, 1990; Gomez, 1999). The question of whether ethnicity is a problem per se or one that is utilized to maintain political dominance retains a fulcrum position in much analysis.


Political structure and trade unionism


Structures of ethnic economic, political and cultural segmentation have served to contain potential challenges from cross-ethnically organized workers (see Jomo and Todd, 1994), and until the past two decades, this was made easier by the relatively low levels of Malay participation in waged labour. For instance the late 1940’s state suppression of the first wave of the militant Chinese communist-controlled Malaysian labour movement was possible owing to the absence of Malays. Control of the state-sponsored Indian union movement of the 1950's required less coercive direct action. This was due to lack of Chinese confidence in the replacement state-sponsored union movement and by its weakness arising from the fact that the movement was controlled by moderate and anti-Communist trade unionists who came from the smallest and least influential group, the Indians (see Jomo and Todd, 1994). Consolidation of ethnically-based political parties in the post-1957 independence period served to undermine the union movements’ ability to develop symbiotic links with political parties without undermining the horizontal basis of trade union solidarity.


In light of its political weakness and regime sponsorship, the labour movement's option of working with and through the multi-ethnic, but largely conservative, coalition of the 1970’s Barisan National dedicated to low wage export-orientated industrialization, carried the possibility of incorporation. The counter strategy of working with and through opposition parties was inexpedient owing to their essentially ethnically predominant membership bases. The chosen strategy of independent, critical nonalignment has proven to be circumscribed in the context of a Malay labour minority. Two reasons may explain this. First, the 1969 `race riots’, precipitated by Chinese political gains in urban areas, put at centre stage a Malay nationalist discourse that emphasized the economic and cultural weakness of Malays in Malaysia. This resulted in the post-1970 affirmative action programmes, as embodied within the New Economic Policy (NEP), that sought to elevate the position of the Malays (Means, 1991).  Consequently, trade union issues of distribution have been seen as secondary, and at times dysfunctional, to the developmental process that was presented as a policy shift to enhance Malay opportunity as a whole, and intellectually articulated as a necessity for `racial’ peace in an ethnically segmented economy and multi-cultural society. Second, the size, structure and perception of the main Malay political party – United Malays National Organization- as the most powerful representative and advocate of the Malay interest created an ambiguous boundary between it and the trade unions. UMNO has an organizational structure that permeates to the root and branch of Malay society. The consequence is that 


When you have a labour dispute, often you have a situation where labour leaders go and appeal to the local UMNO leader to come and resolve the dispute or to influence the management. So you have a labour dispute being channelled into a political process, or a political institution, which strengthens it…UMNO is a very broad, massive, organization down to every village, every branch…practically every work-site has UMNO representatives.’ (Interview: MTUC Research Officer, July 1999).


While many Malay workers view UMNO, rather than trade unions, as the first channel for labour grievances, the fact that UMNO also represents the business interests has resulted in the hindering of its ability to represent the Malay rank and file (Ibrahim, 1998). Nevertheless, the developmentalist dependent state has been able to utilize the notion of `national interest’ to undermine oppositional trade unionism. At workplace level, management have also sought advantage from the potential fractures to trade union solidarity on grounds of ethnic closure based on Malay identity, interest and cultural practices (Casparez, 1998; Smith 1994). 


Dependent State: the dialectic of ethnic development


In natural resource-rich Malaysia, the colonial economy was reliant on the export of rubber and tin which accounted for 85% of export earnings and 48% of GDP prior to independence (Kuruvilla and Arudsothy 1995).  The post-1970 Export Orientated Industrialisation (EOI) policy has seen a transformation of the economic structure of Malaysia such that by 1995, manufacturing goods accounted for 76.7% of all Malaysian exports. Just two sectors accounted for 70.2% of manufactured exports with electrical and electronic goods and electrical machinery, appliances and parts accounting for 50.3%, 16.9% respectively (Department of Statistics 1996). Such is the significance of semiconductors and the electronics component sector in general, and US investments in particular, that 14 US electronics firms accounted for 21.1% of manufactured exports and employed 31.5% of the estimated 130,000 electronics employees in 1990 (Malaysian-American Electronics Industries, 1993). In 1996, eighteen US electronics companies accounted for almost ten per cent of Malaysia's gross manufactured exports and employed 65,000 people (Malaysian American Electronics Industry, 1998).


The development decades, commencing in the 1970’s, but significantly accelerating in the 1980’s and 1990’s, have altered the ethnic composition of the workforce and business class and seen the ethnic re-configuration of the MTUC. For instance, in 1970 64% of Malays were engaged in agriculture and 5% in manufacturing, but by 1995 the comparable figures were 21% and 25% respectively. In absolute numbers, manufacturing provided employment for just over 73,000 Malays in 1970, but over 1 million in 1995. The comparable figure for services, which together with manufacturing accounted for 50% of Malay employment in 1995, are 224,000 in 1970 but just over 1 million in 1995 (7th Malaysia Plan 1996, Jomo and Todd, 1994). The labour movement is concomitantly reflecting this relative and absolute change through increasing Malay dominance of the union movement. This is reflected in the fact that over 70% of trade union leaders and members, 60% of the MTUC general council (MTUC Secretary General, 16th July 1999, Subang Jaya) and 75% of its executive are Malay. Affirmative action-based development also saw increasing Malay participation in business and the growth of Malay professionals and managers (Gomez and Jomo, 1997). Thus while NEP objectives have, to varying degrees, been achieved, this success has itself thrown up the potential for intra-Malay political manoeuvring over issues pertaining to the relative gains amongst the Malays themselves in a context that could be described as a dialectic of ethnic development.


This changing context has been mirrored in the significant 1986 and 1997 ruptures in the ruling Malay party (UMNO), which themselves have arisen from factional conflicts over control of resources (Gomez and Todd, 1997; Pers. Comm, Gomez). The result of these divisions has been the formation of political parties purporting to advance the labour interest. This happened with the formation of SEMANGAT ’46 (Spirit of 46) in the recessionary period of 1987 and with the formation of Keadilan in 1998.  The growth of a Malay working class has not been lost on the incumbent regime, which has at times attempted sponsorship or incorporation of particular elements within the trade union movement. On a broader front, since the 1980’s, the favoured state strategy has been promotion of in-house unions, Japanization and quality improvement, all of which have been wrapped up in the ‘Look East’ policy of the early 1980's and the subsequent ‘Asian values debate’. These have been widely discussed and reported in a media that is owned by political parties and their proxies (see Boulanger, 1993). Such a strategy has been argued to be attractive for its potential to pre-empt and/or contain the possible development of broad-based class organisation and consciousness by fragmenting it in favour of enterprise consciousness operating within an ideology of a common ethnic and national interest (Wadd, 1988).



Trade Unionism, the State and the Electronics Industry


The first electronics investments, by National Semiconductor in 1971, arrived at a historical juncture in Malaysian society.  The ‘race riots’ of 1969 had led to the NEP (New Economic Policy) with the aim of securing Malay hegemony in the political and economic sphere over the Chinese, whose threat to the former in the 1969 elections was seen as a cause of the riots. In this context, the electronics industry was attractive to the Malaysian Government because it was seen to be able to effect economic growth and employment without enhancing the power position of the Chinese (Means, 1991) while being sufficiently labour intensive to attract a large number of Malays into the urban wage economy (Grace, 1990) and thereby enhance Malay income.  These factors were seen as prerequisite to political stability and thus the retention of UMNO’s political control and hegemony.


State Accommodation


To allay the apprehension of potential investors that labour-intensive assembly operations might be adversely affected by industrial strife, the government stated that 'unions will not be allowed to form in the [electronics] industry'. Such apprehension may not have been unfounded given that electronics workers in Hong Kong’s Fairchild electronics had taken strike action in pursuit of a wage increase only the previous year (Kowalewski 1990).  While unions were not legally outlawed, a union-free environment was to be achieved by giving 'pioneer industries' protection against demands that were higher than the legal minimum stipulated by law; through ministerial powers to outlaw recognition disputes, restricting access to labour courts; introduction of service requirements before individuals could stand for union election and the removal of negotiation over hiring, firing and transfer (Arudsothy 1990).  The restrictions were officially justified to "maintain a manageable labour force, attract new investments, create employment opportunities and to make possible a more rapid pace of industrialisation" (Deputy Prime Minister quoted in Jomo & Todd 1988).  The government has defended its restrictions on freedom of association, domestically and internationally to the ILO on grounds that the industry had an important socio-economic role in the achievement of NEP objectives, and unionisation would create a disincentive for foreign electronics investors (Wrangle 1988).


Thus, despite de jure right to trade unionism in the electronics sector, the Malaysian government thwarted the early 1970’s Electrical Industry Workers Union (EIWU) recruitment drive at Monsanto, a member of the American electronics grouping (MTUC: General Council Report 1974-1976). This was justified by the state on grounds that electrical industries were not similar to electronics industries within the meaning of the Trade Union Act 1967.  In response to late 1970's international attention and a volatile domestic political climate with local unrest and anomie arising from uneven development (Means, 1991), the Malaysian state retreated from its earlier accommodation of multinational capital. In defiance of the EIWU, which it viewed as a relatively militant union (Jomo and Todd 1994), the labour minister advised the MTUC to submit an application for registration of a separate national electronics union (NUEW).  While placating international pressure and domestic opinion, electronics companies signalled "that.[they] are not interested in the idea of unionisation [with] some larger companies ... indicating that they would phase out their operations if workers were allowed to form unions" (Business Times 9/3/85).  In this climate and in spite of the legal right to unionization, this and subsequent applications for registration of a national electronics union in 1980 and 1986 were ignored by the Registrar of Trade Unions (RTU).


State accommodations under stress


In the mid to late 1980's, the Mahathir administration was again attracting adverse international and national attention owing to the authoritarianism exhibited during the recession and the accompanying political crisis of the mid 80's.  These events had led to the most vociferous critics, including trade unionists, being imprisoned (1987), the opposition within UMN0 purged (1987), and senior judges removed and dismissed from office (1988) (Means 1991).  In 1988, the AFL-CIO petitioned the US government to investigate worker and human rights violations in determining renewal of Malaysian GSP status (which provided favourable duties on imports to the US). The Malaysian government viewed the preferred nation status as a 'locational advantage' for assisting investments (Malaysian Business July 1-15 1991). While the petition, like two subsequent ones, proved to be unsuccessful, the threat to GSP status was seen to be particularly significant for the electronics sector which exported 36% of its silicon chips to America In this context, the Malaysian government, once again, accepted the idea of a national electronics union.


Without informing or consulting the electronics industry, the Minister of Labour notified the MTUC of the Cabinet decision to allow unionization of the electronics sector. Immediately prior to the commencement of the GSP hearings in September 1988, the change of policy was widely publicised by the state-owned media. In an expressed confidence that investments would not be affected, ministerial pro-union sentiments were widely publicised and the Labour Minister stated `....  we believe an organisation that works as a unit will contribute to better employer-worker ties and ensure industrial harmony' (Labour Minister Lee Kim Sai 23/9/88) while the Deputy Prime Minister added that 'unions should be used as a healthy negotiating tool'.  In an apparent spirit of co-operation and tripartitism, the government stated that unions in the electronics sector were to be organised with the help of the Malaysian Employers Federation (MEF) and the MTUC.  The MTUC submitted an application for formation of the union in October 1988.  The change in unionisation policy and the release of some detainees was publicised as being a  '...timely and convincing demonstration that democracy is alive in Malaysia' (Sunday Star 25/9/88).


The Dependent State and Multinationals in conflict


Within four days of the announcement, and under pressure from electronics companies, the MEF organised a day long, 'closed door' industry discussion of the unionisation issue.  The resulting policy was that employees ought to be allowed to choose between no union, in-house union or industrial union rather than having one imposed upon them (Business Times 28/9/88).  Indications of employer preparedness for union recognition is demonstrated by the fact that Harris Semiconductor had hired consultants to conduct training sessions for managers and supervisors on union avoidance in September 1988. That within three days of the employers meeting, allegations of intimidation of workers who formed or joined unions and threats of plant closures, were being widely, prominently and negatively reported in the state-controlled media indicates State-MNC conflict (Star and Business Times 29/9/88).  In early October, and one day before a meeting between the Labour Minister and the electronics companies to discuss the unionisation issue, AMD (Advanced Micro Devices) without warning or consultation and in breach of legislation, announced 900 redundancies. On the 2nd of October, after the meeting with MAEI representatives, the Minister of Labour announced a volte face and a national union was no longer guaranteed.  The application for the formation of a national union was once again ignored.


The international business press reinforced the anti-union position of the electronics multinationals by supporting the anti-union message of neo-liberal economic orthodoxy.  The Wall Street Journal (6/10/88) commented that the Malaysian government's decision to allow unions in the electronics industry 'runs counter to the government's campaign to attract foreign electronics investment by shielding companies from unions. It went on to report that ` a western trade official [said] "further investment could be jeopardised by this move... the electronics guys have said that if unions come in they'll leave"'. Similarly the Far Eastern Economic Review (6/10/88) reported that, "electronics companies are stating that if labour costs rise significantly, announced new investment in wafer fabrication could be diverted elsewhere".  The editors’ comment in South East Asia High Technology Review of December 1988, in an unequivocal summary of the employers’ position, highlighted the problems of dependent export-orientated industrialisation:


If Malaysia's electronics industry becomes strongly [my emphasis] unionised there will be no Malaysian electronics industry.  This simple fact makes the current push to unionise the South East Asian country's workers a foolish endeavour.  If Malaysia had a monopoly on cheap labour, perhaps the country could develop a strong electronics union.  But there are a dozen locations in Asia alone where manufacturers could shift production if Malaysia becomes a difficult place to do business ...the world does not need many more unions attempting to fix the market for wages.


While the Malaysian state was being drawn into a confrontation with American electronics firms, a senior official of the US Trade Representative’s office declared that the formation of in-house unions may help Malaysia retain its privileges under GSP, and that the Malaysian government was required only to take 'positive steps' towards improving human rights (Business Times 29/10/88). In this manner, the Malaysian state was provided with a domestic and international defence against accusations of violating workers' rights while partially conceding to the dictates of American capital.  In contravention of Malaysian Law and contrary to previous commitments, anti national union tactics were resurrected by the state. When the MTUC accepted the Director General of Trade Unions stipulation that all electronics workers be covered in a national secret ballot  (New Straits Times 19/2/89), the government declared that irrespective of the result, no national union would be allowed (New Straits Times 28/2/89).


Fifteen days before the MTUC-sponsored NUEW (National Union of Electronics Workers) petition to the courts to enforce their legal rights to registration or consideration of their application, the DGTU rejected the application.  The disingenuous and well-trodden grounds that the NUEW members would be drawn from electrical and electronic industries were used to justify the decision.  The rejection was upheld on appeal to the Minister of Labour whose decision, under the Trade Union Act (1959), could not be challenged in court.  Thus despite initial indications, Government ministers again publicly argued that the union issue is of a "sensitive and special nature ... [and] ... the interests of the electronics workers... [and] ... future employment opportunities need to be considered". (Star 24/3/89).  By November 1989, shortly after a meeting between Prime Minister Mahathir and Henry Kissinger (now inward investment advisor to the Indonesian Government) and Jack Welch of GE (Interview: Secretary HSSWU, 2000), the state position had crystallised as Malaysia retained its GSP status. Prime Minister Mahathir asserted that only in-house unions would be allowed since "an industry wide union, national or state based, will hamper efforts to develop the electronics industry further" (Business Times 28/11/89).


Between 1989 and 1993, the MTUC regularly raised the issue of a national electronics union at international level particularly with the ILO and the International Metalworkers Federation (IMWF). Domestically, the opposition utilized the issue of labour. For instance in 1990, Semangat `46, in an offer of an alternative way to the 'autocratic and authoritarian' regime of the Barisan National, promised to repeal oppressive labour legislation and gave a promise to grant Labour its 'due place under the Malaysian sun' (Surah Buroh, 1990). The fact that Semangat was part of a wider oppositional coalition to which trade union activists were attached (including the current President of the MTUC) has led to significant criticism of the leadership and attempts to sponsor alternative centres. The MTUC has come in for increasing government criticism for tarnishing the image of the country and potentially jeopardising foreign investments and thus employment levels and workers' welfare (New Straits Times 8/5/92).  During this time, UMNO-controlled media editorials have given high profiles to sentiments that argue ".. our union leaders should be imbued with a sense of patriotism. Loyalty and national pride are inherent in the love for one’s country especially when we are overseas.  An act of betrayal of this trust is tantamount to one being labelled a traitor..." (New Straits Times 27/7/92). The Malaysian Government seized these opportunities to attack the Malaysian labour movement, accusing it of being used as "mouthpieces" of US trade unions to reduce the attractiveness of overseas locations (Business Times 17/6/91) and ".. creating industrial unrest and political instability" (Deputy Prime Minister Ghafar Baba quoted in New Straits Times 15/1/93).  The Deputy Prime Minister publicly proclaimed  that "destructive methods were being used by a small group of unionists who also happened to be opposition party leaders... who were not bothered about peace and harmony and who placed their own interest above the country's interest...." (New Straits Times 29/9/92).


In response to a wider emergent debate about Asian democracy, the Minister of Human Resources warned ASEAN members to be "watchful of the trade unions in the developed West making attempts to extend their influence in labour movements in South East Asia to destabilise industrial relations and ... to impose upon developing nations labour practices which are unsuitable in the ASEAN context" (Star 30/11/92). By July 1993, the MTUC began to be bypassed in national tripartite bodies in favour of the 1989 government sponsored, and pro-government, trade union centre the MLO (NST 15/7/93). Meanwhile, the President of the MTUC was charged with criminal offences in 1994. This charge was eventually dropped as a result of intervention by the Deputy Prime Minister Anwar Ibrahim who was attempting to woo the President into UMNO and thus to strengthen his faction.  In 1994 the MTUC leadership dropped its twenty-year campaign for a national union, and the MTUC president joined UMNO in 1996, and subsequently accepted a Senatorship to represent the labour voice in government (Interview: President MTUC, July 1999).


While the Malaysian government in conceding to in-house unions had not escaped international pressure, this policy was the cornerstone of not only the Malaysian government's defence against accusations of anti-unionism and dependency on multinational capital but it also formed the long term strategy of incorporating the Malay working classes into UMNO. The next section probes into the response of employers to in-house unionism, and its consequences.


Micro Anti-Union Strategies of American Employers


The soft responses to the threat of unionization in some US MNCs in Malaysia have been attempts to `humanise’ their workplace by not only increasing salaries but also by introducing job rotation, rest pauses, human relations training for supervisors, open door policies and improved communications (Abdullah, 1992). US electronics MNCs argue that their personnel policies negate the need for union representation amongst their workforces. These non-union approaches have been accompanied by harder responses (which have not been exclusive to but are most prevalent in US companies). Thus assessment of `cultural fit' included `fit' with the non-union policy whereby job applicants have been screened against a list of union organizers held by the Industrial Relations Department. There have also been direct threats, for example, Motorola not only awarded a pay rise and informed employees that it was against unions and their formation but pro-union workers were warned of the `difficulties of joblessness' and the most outspoken were transferred to `less desirable' positions (Grace 1990; Hamilton 1991).


Few studies, however, have provided detail of the micro anti-union strategies of US electronics employers, and the case of Harris Corporation has provided significant detail not least because it became a matter of litigation. The following sections provide a background to the Harris Corporation and introduce a framework within which to organize the case material, before providing an exposition of the events and an evaluation of its outcomes.



The case of the Harris Solid State Workers Union





In 1988 the Harris Corporation acquired General Electric's semi conductor business (RCA)11 to expand its operations in commercial markets.  In 1995 the Harris Corporation, involved in electronic software and hardware for applications in defence, space exploration, aerospace, satellite communications and commercial applications, employed 27,000 people in 150 countries and had sales of US$3.4bn. Harris Semiconductor had 8000 employees worldwide and sales of US$635m.  The Malaysian operations are primarily assembly and testing.  As a result, 85% of its staff of 2,600 (1989) are Malay women workers.  Semiskilled supervisors are mainly men (though more women are entering these positions) while skilled workers are predominantly Chinese males and the indigenous managerial staff are also mainly Chinese. (Interview President: HSSWU 1993; 2000).




Lawler (1986), in his general model of union growth and decline, proposes a model of employer and union tactics in US union certification elections. He proposes that union and employer strategies and outcomes will be influenced by, and aimed at controlling, a) contextual influences (labour markets, product markets, legal system, political system, and demographics) b) employee sentiments and preferences and c) the protagonists’ campaigning strategies. With regard to employers, Lawler argues that at micro level, an employer will use a mixture of tactics from five broad categories.  Firstly, an employer can influence employee sentiments and preferences by attempting to change the way employees feel via use of communications, inducements, threats etc.  Secondly, buffers may be deployed to limit interaction with external and internal contextual influences (including union activists/organisers) via direct supervisory action, no solicitation or distribution rules, illegal job discrimination against union officials and activists to limit interaction etc.  Thirdly, making real, as opposed to perceived, changes to substantive and procedural elements of the employment relationship may control internal contexts, e.g. wage increases, grievance procedures etc.  Fourthly, monitoring tactics to detect current and changing employee sentiments can be instituted via employee surveillance, surveys and interrogation.  Finally direct action can be taken, whereby the employer attempts to change the environment within which unionisation is (or is about to be) expressed, i.e. via election delays, plant relocation, plant closures, procedural manoeuvring etc.



All the above tactics were utilised in the case discussed below although they were configured to utilize the particular Malaysian context in order to strengthen impact. The sequence moved from preferences and sentiments in the pre-recognition stage; buffers, threats, intimidation and monitoring in the union organising and membership phase and finally environmental change when all else had failed.


The first electronics in-house union


RCA Workers Union - (to be referred to as HSSWU) applied for registration on 23 January 1989, in the heat of the industry union controversy and was registered within eight days. The Deputy Labour Minister even agreed to officiate at the opening of the Union's first AGM13.  The union proceeded to attempt to gain majority membership and thus hoped to achieve automatic recognition. However, accusations of illegal harassment and intimidation led to the Labour Minister reportedly informing the Chairman of MAEI that "the workers will be free to form in house unions or retain the status quo" (Business Times 25/2/ 89). It was suggested that action would be taken against any party found interfering in the exercise of that choice (New Straits Times 25/2/89).  While the MAEI denied concerted co-ordination in opposing unionisation, including in-house unions, the state media reported that American employers "are believed to be backing RCA in the test case" (Star 2/3/89). Indeed between January and February, the managing director of RCA was chairman of the MAEI, which at the time had in its membership Hewlett Packard, Intel, Integrated Device Technology, Litronix, Monsanto Electronics, Motorola Semiconductor, National Semiconductor, Quality Technologies Ottoelectronics, Western Digital, Advanced Micro Devices Export, Texas Instruments, RCA and Harris Semiconductor. (Business Times, 9 March 1989)



The company rejected the claim and was referred to the Director General of Trade Unions (DGTU) to determine if the union had majority membership.  Two months later, while enquiries were being conducted, RCA was sold to Harris Semiconductor and the operation’s identity was now Harris Solid State, which made its parent – The Harris Corporation - the sixth largest electronics component group in the world (New Straits Times 23 Feb. 1989).  All three of its Malaysian companies were in close proximity and run by the same management team. The registration application was only accepted by the DGTU after a secret ballot of the membership approved a name change to Harris Solid State Workers Union (HSSWU). On 10 January 1990 the DGTU gave the company 14 days to recognise the union, to which the managing director replied that "the company is studying the matter... we will respond with a press statement when appropriate". In the meantime, the Human Resources International Director and a legal advisor of the Harris Corporation had flown in from the USA. Twenty four hours before the expiry of the deadline set by the DGIR the company transferred the contracts (with better terms and conditions) of most of the 2,500 employees of Harris Solid State to Harris Advanced Technology (HAT), a sister company that employed 100 staff (Business Times 25/1/90). Five hundred employees signed a petition in protest against the heavy-handed tactics employed with some claiming they were forced to sign under threat of possible job loss.



Employee sentiments and preferences


In an attempt to avoid unionisation, management initially directed their strategy at employee sentiments hoping to influence their preferences.  Media reports such as the South East Asia High Technology Review editorial were circulated with the aim of buffering the workforce from the effect of pro-union government rhetoric.  The day following the inaugural meeting of the union (21 January 1989) staff at and above supervisory level were warned about the need to remain loyal to the company and to monitor unauthorized non-work activity. Senior and middle management surveillance was extended to night shifts in order to buffer employees from the union activists.


In attempts to divide the union along ethnic and religious lines, Malay employees, including prominent Malay union activists consisting of supervisory rank and above, were called to two unofficial meetings. These were organized by a recently recruited senior Malay staff manager and UMNO activist to discuss "Muslim welfare", Muslim solidarity" and the formation of a Muslim committee to channel workforce grievances. Malay unionists were rebuked for having been “used by the Indians when the Malays had always taken the leadership role in [the] Country".  It was suggested that the Malays were being led by self-interested Indians who had little regard for the company and that Malays ought to 'be the guardians of themselves and ‘the company’ (my emphasis).  The group was informed that "Mat Salleh”, 'the whites', could, at worst, transfer operations resulting in unemployment but, at best, they would shelve expansion plans. When these tactics failed, a senior Malay union official was called to meetings with a departmental staff manager where pressure to leave the union was brought to bear.  Each meeting lasted more than two hours and occurred on more than four consecutive days. 


At the level of non-supervisory staff, the company arranged for an 'ustaz’ (religious teacher), who purported to be a government official, to lecture on 'work ethics'.  These company lectures occurred twice a day over two consecutive weeks and were delivered to groups of approximately 100 each. The audience was warned that ‘a certain group' who were under 'police surveillance' was out to 'create trouble', and if they were allowed to succeed the outcome would be job loss and possible plant closure. In contrast, the company was praised for its facilities and the need to give management undivided loyalty was emphasized.


Intimidatory tactics were used to discourage workers from attending the unions' inaugural Annual General Meeting where workers were informed that attendance would be 'asking for trouble'; increments would be affected; they would suffer 'a miserable life in the company' and could lose their jobs.  Employees were warned that secret attendance would be detected by company 'spies' in the union (one executive committee member was expelled for co-operating with management to undermine the union) while managers would take pictures.  Supervisors, claiming to pass management messages, informed staff that 'the union AGM was a private matter and as such employees attend at their own risk, the company would take no responsibility for insurance compensation and medical charges should anything happen’.  Some employees were threatened with disciplinary action for mere attendance at the AGM (Business Times 3/4/89).



Countering Union Campaign Strategy


Union officials were barred from entering company premises on union activity after working hours.  When the union gained an injunction restraining company interference with organising activities, managerial presence was imposed by playing, at full volume, newly installed, televisions during union organizing activities (Sunday Star 4/6/89). Activists refusing to give up membership were targeted for reprisal.  This included transfer to less desirable duties or into areas where contact with the workforce was minimised and could be monitored.  Tactics involving psychological, physical, procedural and economic intimidation varied from case to case and was viewed by the activists as designed for maximum impact depending upon the economic and domestic circumstances facing the individual as well as their personal make up and position. For instance, the least confident were subject to individual pressure, high achievers to demotions or withdrawal of work, unskilled/semiskilled women activists were required to be accompanied by anti-unionists when using the toilet.  They were forbidden to nod, smile, speak or socialise with friends while at work.  Often transferees were not provided training in conducting new duties and necessary operations instructions were withheld.  Union activists who were highly qualified, experienced and skilled, were left idle, transferred or demoted to lower status, repetitive and monotonous jobs.  Those in supervisory positions had their responsibilities eroded, decisions overturned and were bypassed by subordinates and managers.  Some suffered extreme financial loss because of transfers to day work.


For the first time in their work and company careers, most activists were subjected to regular disciplinary proceedings on matters of established custom and practice. One popular and highly regarded Malay unskilled female activist with an impeccable record of commitment to, and performance in, work and other internal and external company matters was subject to eight disciplinary investigations within a 10-month period of joining and becoming active in the union. Performance review gradings of all the activists plummeted from regular, above average and  outstanding ratings (the average length of service of the activists was eight years) to below average resulting in smaller increments and relative loss of salary.  Attempts were also made, via three 'poison pen' letters, to implicate two senior executive committee members by stating 'they tried to molest two girls at the union office'.


In April 1990 the company transferred 700 employees of a branch plant to the main plant from a temporary building the company had been occupying.  The entire executive council of the union and activists (comprising 24 workers) were left behind or transferred from the main plant to work a 24-hour shift system in a building which had previously accommodated 750.  Initially, no work was provided and the unionists 'had nothing to do and ... were left to loiter in the abandoned building'.  After protest, some testing work was made available though without the necessary environmental controls.  They were also denied access to workers in the main plant while access to the company clinic and offices was available only under a security escort.  The staff were required to work a 24-hour shift system and permission for day shift work was denied to two women late in pregnancy.  The building was thought to be haunted and there had been 'many cases of mass hysteria before' necessitating plant closure and exorcism of 'bad spirits'.


In April 1990 the Minister of Human Resources ordered the company to recognise the HSSWU which because of the transfers, represented 24 employees all of whom were union officials or activists (Star 21/4/90).  The company complied within seven days.  Meanwhile the Minister, ignoring the intimidatory tactics deployed by the company, stated that HAT workers "have the right under law to form an in-house union [and he] will try [his] best to speed up its recognition"

if an application was submitted (New Straits Times 15/5/90).


In early June 1990 the Harris Corporation publicly unveiled plans to relocate operations from California, Taiwan and Singapore to Malaysia.  The company announced that it expected to invest M$60m the following year to bring the corporation's investments in Malaysia to M$7Bn while creating an addition 600 jobs (Business Times 7/6/90).


 In late September, six days before a conciliation meeting over the first collective agreement covering the 24 employees of Harris Solid State, the Harris Corporation decided to close the operation.  The unionists were made redundant, despite advertised company recruitment campaigns immediately before and after this event.  The immediate response of the government, which had presented itself publicly as the champion of the in-house union, was to ask for an 'amicable settlement’.  Ministers stated that "employers should not have a negative attitude towards trade unions but instead should take appropriate action in the interests of the company and nation” (Business Times 24/9/90).  The dismissed unionists were advised by the Minister of Human Resources to file reports of wrongful dismissal which would be investigated as a matter of 'top priority' (Star 25/9/90). The Minister, after a meeting with senior management, stated he 'was not satisfied with the explanations given by the company’ regarding the dismissals (Business Times 27/9/90).


Because of this case, the ILRERF independently filed a petition to remove Malaysia from the GSP, although the main protagonist was the American company. The unionists’ cases relating to infringements of the right to organise and not be dismissed for undertaking union activity was repeatedly delayed and postponed in the courts. When eventually heard in 1996, the judges ruled that the company name change was a matter of form rather than substance, and the dismissal of the non-activists was due to their involvement in trade union activity rather than redundancy. This led to the reinstatement of all 21 of the sacked unionists, and compensation of six years back pay. As an indication of state interest, the decision was reputedly discussed at cabinet with the Minister for International Trade and Industry (who acts as the voice for inward investors) raising concern over the fact of reinstatement rather than just compensation. This apparently resulted in a call from the Prime Minister’s Office to the courts seeking justification for the decision. In contrast, the reaction at workforce level was different as the current Secretary of the union described:


"soon as we came back .. the response … it was fantastic. We were there, all of us.... people were coming and going out and waving as if nothing had happened. Some of them came and hugged us... we demanded a plant tour before lunchtime because during lunch it would be quite packed to stop... we timed it for lunch break, at that time people are coming out and they saw us [and they were] crying and shouting and screaming … it was really quite emotional.". (Interview: July 2000)


The company has attempted to disrupt unionisation through legal and organizational means rather than through direct individual intimidation. As a result, there has been no management attempts to stop the activists from organizing. This has not stopped the company from adopting a soft approach of personal chats with those perceived to be union members. The Human Resources Department, however, continues to monitor and show a large presence when the unionists are undertaking campaigning. As the Secretary of the union states


when the union is pamphleting, or other activities…they're (Human Resources Department) everywhere...to show like there’s ... a war - you know show a flag, the battleship is there....They have gone to the level where they are not afraid to do that kind of thing. …[T]hey have people meeting them from the floor...  if we give documents… they are one of the first to get a copy... and have their core group discussion…[T]hey also have, among the workforce, people who are willing to die for them... and more often than not they are UMNO people... and they come and tell the workforce all sorts of things... shouldn't go against management it's against investment.... the favourite propaganda  is that the company may close up and go... and we will fall on poverty .... we should be thankful (Interview: July 2000)


There have been attempts to utilize religion, for instance, with the company issuing a letter in 1996 stating that the union is Christian-based and influenced. This tack was countered after a Malay left political activist and the union president translated an article from an Egyptian Islamic Authority on Islam and Trade Unionism. In the meantime UMNO attempts to create a grouping to process workers welfare has all but dissipated and is able to only attract small numbers – some 40-50- to its infrequent open meetings.


The company has continued to pursue its union avoidance strategy through the courts. In 1998 it successfully challenged the Director General of Trade Union Affairs’ (DGTUA) acceptance of a name change from Harris Solid State to Harris Advanced Technology Workers Union, which led to the union registration in January 1997. The courts have decreed that HSSWU as an entity could not be transferred to HAT simply through a name change because HAT was not synonymous with HSS. Nonetheless, pending an appeal, the union has continued to push for recognition and negotiation. In June 1999, the union submitted a written query asking management whether they would be willing to recognize and negotiate rather than litigate, and if the former, the union would undertake the necessary legal and procedural steps. As a result of management refusal to reply to three letters to the same effect, the union began to organize. This commenced with general awareness building and social development courses which were funded from the remainder of a 5% contribution from the activists’ wrongful dismissal payouts. The Secretary of the union stated


“We had enough for a hotel room for two or three days, went through the session, my goodness that even changed our leadership - we were shocked. The sessions about social development, leadership development …but actually it's awareness building- about the environment - the people, the forces….ideological, political and cultural analysis. We had three sessions a total of 80 people and they [then] went down to the factory of 2000 and we had a first picket and eight hundred to 1000 people turned up, the second picket 800 and the third picket even more (Interview: July 2000)


As a result of these pickets, the company agreed to negotiate. But after three meetings, the union discovered that Harris had sold the semiconductor division and it had become known as INTERSIL. Thus, the union broke off negotiations. In April 2000 the union was served with a notice to `show cause’ as to why the union should not be de-registered by DGTUA on grounds of the earlier court decision. In the meantime, union membership has gone from 56% in 1989 to 70% in 2000. This, according to the secretary, is due to the fact that older workers who went through the struggle have utilized their maturity and seniority in recruiting younger, more urbanized and materially orientated workers. However, despite high levels of membership, finance remains a source of difficulty.


The post-reinstatement period coincided with the Asian economic crisis and a rupture at the heart of Malaysian politics as represented by the dismissal and imprisonment of Deputy Prime Minister Anwar Ibrahim who had built his support base broadly and appealed to the Malay masses. The whole process has politicised many. For instance, the ex-president of the HSSWU resigned his post after reinstatement and become involved at a high level in the oppositional forces that were unleashed in the wake of the Asian economic crisis and which coalesced around the dismissal of the Deputy Prime Minister Anwar Ibrahim. The current President is highly active and involved in the socialist Parti Rakyat Malaysia (PRM). At workforce level these contextual changes are also having an impact on its language (if not on the form of resistance). As the secretary reported:


the biggest impetus was given by this Anwar thing . .. a very big impetus. They are willing to question, they are willing to say that you are wrong, before they were not... there has been a big change in the workforce, and management are also backtracking now.... in fact they [the work force] will shout Reformasi .... and the word cronyism is now openly said -` I know why you are doing this, you are doing this to protect your cronies, to protect the management - you're working for the cronies (Interview: July 2000)



Discussion and conclusions


The NEP emphasis on industrialisation increased Malay economic participation and led to the growth of a significant Malay working class. The possibility of class organisation across, but more likely within, ethnic groupings resulted in the state favouring in-house unions as a general model for the 80% of unorganised workers in the country. There was initial suppression of unionism in the electronics sector. Subsequently, the Malaysian State attempted to retract its concessions which has been granted under economic pressure from US-based labour organizations. This not only threatened Malaysia’s economic preferences from America, but also exposed the government to international and domestic criticism over its record on human rights and freedom of association. These latter factors enabled independent labour organisation in the dependent state to potentially make gains that could not have been otherwise possible.  However, lack of will among Western decision makers to accommodate anything other than the most basic of the concerns raised, served not only to undermine the local campaign but to leave the labour movement and its activists open to state reprisal and thus to weaken the domestic labour movement.


Nonetheless, the threat of international economic sanctions and pressure has meant that the dependent state has been unable to marginalize or suppress the electronics unionisation issue domestically, particularly where the state has been undergoing a 'crisis of legitimacy'.  However despite its rhetoric and apparent belief in its ability to exert countervailing power against MNCs, unionisation policies have been stubbornly, determinedly and publicly resisted by American multinational capital. As a result, the Malaysian state sought to minimise the domestic impact of its own weakness by launching a broad-based offensive which has sought to a) undermine the integrity of international pressure groups by arguing they are motivated by self-interest and b) forcing the domestic labour movement to dissociate itself from international action thus strengthening the first strategy and c) criticising Western states for attempting to impose Western notions of democracy in what is supposedly a different socio-economic and cultural context.


The oppression of labour is not simply something desired per se by dependent states. Under some circumstances, the state has other considerations which can give rise to concessions to labour.  However, this case points to the fact that a high degree of dependence on multinational export-orientated capital may undermine the ability of the state to pursue a policy designed to meet its internal needs.  If this is indeed the case, the implication for those advocating links between trade and labour rights cannot point the finger at developing states alone, and need to recognize that labour suppression may also be the result of the actions of first world multinationals, and inactions of first world states.


On a more positive note, the case indicates that where the working class perceives a commonality of purpose and interests, the successful utilization of ethnicity as a divisive tool is not guaranteed. Furthermore, while resistance to unionisation among American employers is not expected to diminish and the prospect for unionisation, at least among American electronics MNCs is grim, this does not necessarily mean defeat for the labour movement. As this case indicates, not only does the struggle of Malaysian electronics workers continue, but past events have politicised activists and created a strong resolve amongst the workforce to resist perceived injustice. In the words of the Secretary


we started from just ordinary people working in the factory and it's all a process…over the last 13 years we grew... I wouldn’t be talking about politics, and I am not the only one... so many people coming after me, before me, who are aspiring to, or running the political arena... some are very strong in the Reformasi movement, they are the ones... forefront of the movement and they wouldn't be there if they weren't involved in the union ...a lot of gains, more gains than anything else, the only thing we don't have is a collective agreement (Interview: July 2000)


Mhinder Bhopal holds a Senior Lectureship at the University of North London, having graduated from the University of Abertay and the London School of Economics. Mhinder has published on industrial relations in Malaysia and is currently co-editing a special edition of the Asia Pacific Business Review on the ASEAN financial and political crisis.





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