Malaysia: Multinational Hualon taken into receivership

Textile workers win big concessions through persistent campaign

With determined leadership, workers realise that their collective strength can win concessions from the bosses. After four months’ campaign, following their company’s ownership change, Hualon Corporation textile workers received compensation ranging from RM1,000 ($300) to RM17,000 based on years of service.

Malaysian law does not guarantee workers the right to compensation when a company goes bankrupt. Worker compensation normally comes last after settling debts and paying creditors. In most cases workers’ rights are totally denied.

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

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

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

With laws favouring the employer, and without a union to initiate a campaign among workers in Nilai and Melaka, a Committee of Hualon Workers (CHW) was formed. CHW first demanded that the receivers to immediately clarify about retrenchment benefits, remuneration and jobs under the new ownership. The CHW’s campaign and petition over these issues were supported by around 500 mostly local workers. The activists in the committee realised that the management would pressureise the migrant workers and even revoke their work permits.

After persistent demands from the CHW, the receivers finally agreed to pay the workers retrenchment benefits according to the labour laws, and their jobs and benefits would be retained under the new management. It was then rumoured that only permanent local workers would get retrenchment benefits.

Subsequently, the CHW petitioned again, specifically focussing on compensation. This time it was supported by more than 1,200 workers. The demands were:- a) Minimum retrenchment benefits as per the labour laws plus ex-gratia payments of up to 25 days’ pay per year, according to their years of service, for all local and migrant workers. b) Retrenchment benefits to workers who had reached retirement age but whose service had continued, to be calculated from the first year they joined the company. c) Retrenchment benefits for contract and semi-contract workers.

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

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

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

  • Trade union democracy – form rank-and-file groups in every union.
  • Regularly elect and recall union officials and organisers.
  • Union officials to receive the average wage of the workers they represent, and funds only for actual expenses.
  • Elect delegates or shop stewards by workers in every workplace.
  • Hold regular mass delegate meetings.
  • Vote on major issues at mass meetings of union members.
  • No secret negotiations between union officials and employers. Delegates or shop stewards to accompany union officials in negotiations with employers.
  • Fight anti-union laws with worker mobilisation and industrial action.
  • Conduct a mass campaign to defend worker rights to organise strike action and pickets without legal restrictions.
  • Fight for equal rights for migrant workers. Abolish immigration laws that restrict them from organizing.
  • Internationalism – Unions to collaborate on resources, solidarity boycotts and industrial action. (The same way employers collaborate.)
  • Support workers fighting for wages rises and better conditions in so-called ‘third world’ countries and prevent employers from shifting factories offshore.
  • Build a new genuine mass workers’ party based on trade unions, progressive community organisations and working class people.

Special financial appeal to all readers of

Support building alternative socialist media provides a unique analysis and perspective of world events. also plays a crucial role in building the struggle for socialism across all continents. Capitalism has failed! Assist us to build the fight-back and prepare for the stormy period of class struggles ahead.
Please make a donation to help us reach more readers and to widen our socialist campaigning work across the world.

Donate via Paypal

Liked this article? We need your support to improve our work. Please become a Patron! and support our work
Become a patron at Patreon!

Be the first to comment

Leave a Reply

Your email address will not be published.


September 2008