Research and advocacy of progressive and pragmatic policy ideas.
Code Black and the Hartal Doktor Kontrak campaigns are a powerful illustration of the contract worker problem. Understand the issue here.
By Edwin Goh24 July 2021
Amidst a deadly surge of COVID-19 cases and the attendant exhaustion of frontline health workers, two grassroots campaigns under the names Code Black and Hartal Doktor Kontrak are demanding fairer treatment – including job security – for government contract doctors.
The seriousness of the issue is underscored by its escalation: campaigners have called for a national strike on 26 July 2021 while individual campaign supporters have been called in by the police for questioning. Meanwhile, the government has responded with what appears to be a temporary solution to address some of the campaigns’ demands.
These campaigns powerfully illustrate a critical problem we are currently researching, which arise when employment categories do not reflect the nature of the job commitment and are also not matched up to fair working terms. In this primer, we unpack the problem from the government contract worker perspective.
At the time of writing, the Malaysian Ministry of Health (MOH) employs nearly 270,000 permanent public service workers, of which 150,000 to 160,000 are healthcare workers. The number of permanent employees at MOH has remained relatively stable as shown in Figure 1 below, decreasing marginally from 268,712 people in 2016 to 267,733 people in 2021. However, MOH’s expenditure on emoluments rose in that time period, from RM13.45 billion to RM17.08 billion.
Much of that is contributed by emoluments to contract workers. As per Figure 1 below, the upward trend in MOH’s contract worker emoluments, from RM78.83 million in 2016 (or 1% of total MOH emoluments) to RM1.90 billion in 2021 (11% of total MOH emoluments), point to the rising number of contract workers within the ministry. According to a past report, MOH has the highest expenditure on contract workers compared to other government ministries.
Figure 1: Breakdown of MOH Worker Emoluments vs. Number of MOH Permanent Workers, 2016 to 2021
Since the implementation of the contract system for healthcare workers in late 2016, the number of contract doctors has grown more than nine times, from 2,544 doctors to about 23,000 people in 2021. This is partially due to the glut in number of medical graduates, partially to rules governing medical graduate placement, and partially to constraints in the government’s budget for permanent workers (more on that later).
The oversupply of medical graduates has caused overcrowding of doctor trainees at public hospitals, but the regulation on their medical placements is also a contributing factor. According to the Medical Act 1971 (Amendment 2012), the government has to provide industrial training placements for all medical graduates intending to practise medicine in Malaysia before they can be fully registered as licensed practitioners.
Medical graduates can be placed either as contract junior doctors or, more unlikely, as permanent junior doctors. Contract junior doctors are offered a five-year contract divided into three years of housemanship and two years as a junior medical officer, whereas permanent junior doctors become permanent public service workers. Upon completing the five-year term, most contract doctors have to seek new job opportunities elsewhere whereas permanent doctors may choose to continue their employment with the government or leave for the private sector.
The government has the option to convert contract doctors to permanent government doctors if a position becomes available in the public healthcare system. However, there are severe budgetary limitations on the number of doctors, or other occupations for that matter, that the government may take on as permanent staff. For example, to fulfil the demands of the Code Black and Hartal Doktor Kontrak campaigns to become permanent doctors, the government has estimated that it will cost an additional RM2 billion (we infer annually), which is around 12% of MOH’s annual emoluments expenditure today. As permanent public service workers are also eligible to receive a lifetime pension, even this number may be an underestimate.
As of the time of writing, only 3.41% of all contract doctors have landed a permanent position at MOH. More than two-thirds of those who began their service in 2016 have completed their five-year contract and have yet to secure a permanent placement elsewhere. The MOH currently offers its contract doctors a one-off one-year contract extension to meet the demands for healthcare workers during the pandemic. More recently, in response to the Code Black and Hartal Doktor Kontrak, the government has promised a maximum of four years’ contract extension and paid study leave for all contract medical officers and other contract healthcare professionals.
Taking on workers on a contract basis has become increasingly important in government recruitment as a way to cope with rising expenditure. Hiring full-time employees into the public service is extremely costly, in terms of emoluments but particularly in terms of pensions.
Over the last decade, the government has kept about the same number of permanent public service workers (Figure 2) while the number of pensioners increased from 617,637 people in 2011 to 834,484 people in 2019. And yet the share of public spending on emolument, pension and gratuities of the total budget has surged from 27% of total expenditure in 2011 to 36% in 2021. As per Figure 2 below, between 2011 and 2021 federal government spending on emoluments has increased from RM45.56 billion to RM84.53 billion while pensions have jumped from RM12.26 billion to RM27.53 billion.
Figure 2: Federal Government Spending on Emoluments and Pensions vs. Number of Permanent Public Service Workers, 2011 to 2021
Recruiting workers under contract has provided some breathing space for the government (and taxpayers) in terms of budget control, particularly in avoiding a hefty pension bill down the line. However, there is no indication whether this is a stop-gap measure or essentially a permanent solution to government hiring. If it is the latter, then it will become a significant problem and the current campaigns by the contract junior doctors will just be the beginning of more to come.
Instead of recruiting full-time permanent employees, the government could continue to hire contract workers whose employment terms can be extended repeatedly if needed. In many cases, junior doctors being one of them, this creates a double standard between two classes of workers who essentially perform the same function and who have the same job demands. The existence of two worker classes which are so closely comparable is unsustainable, and will be continuously tested by demands for fairness and parity until the difference in employment terms and entitlements between permanent employees and contract workers is meaningfully addressed.
The term ‘contract’ indicates a level of job flexibility and worker independence compared to permanent full-time employees. Flexibility and independence can be the case for experienced medical consultants, but not really for fresh house officers or junior medical officers. The employment demands on contract and permanent doctors who are performing their five-year industrial training placement is practically identical.
Despite having similar job scopes and level of job autonomy as permanent doctors of the same tenure, contract doctors have a lower salary and a lower set of benefits. Figure 3 below shows the difference in salaries and benefits between contract doctors and permanent doctors.
Figure 3: Difference in Salaries and Benefits between Contract Doctors and Permanent Doctors
Since contract doctors have the same responsibilities and workloads as permanent doctors, they appear to be misclassified and their employment status does not reflect their job nature and level of autonomy at work. Going by the principles of the Fair Work Act mentioned in our past article, they should be qualified for the same pay and same benefits as permanent doctors. Admittedly though, changing the employment status of contract doctors is a difficult decision due to the hefty costs of permanent public sector workers’ entitlements or compensation, as mentioned earlier.
Addressing the issue of government contract workers requires a major change in policy, not only in defining what ‘contract worker’ means but also in rationalising the entitlements or compensation of permanent public sector employees.
It is estimated that the spending for emolument, pension and gratuities could take up to 60% of total government revenue by 2026 if nothing changes. At some point, the government of the day will need to take the extremely difficult decision of pruning the pension entitlements for new permanent public sector employees and replacing it with a defined contribution retirement plan. This is already being done for full-time employees of statutory agencies; the coverage will need to be extended to all levels and government entities in order to rein in costs. The notion of ‘lifetime’ job guarantee for public service workers would also have to change.
Update: Maybe the above is not as politically difficult as we believed. On 27 July 2021, the Health Director-General Tan Sri Dr Noor Hisham Abdullah announced a special task force led by the Malaysian Medical Association and the Health Ministry to study amending the Pension Act towards converting pensions to EPF contributions. If successful, this would make the prospect of offering permanent positions to contract doctors much more affordable to government coffers.
At the same time, the employment classification for government contract workers also needs to be redefined and updated. Employment classifications should reflect the nature of the job and the level of worker autonomy, which we have written about as part of our exploration of fair work principles. An ‘independent contract worker’ should have significantly higher levels of job autonomy and flexibility than a full-time employee. If the government intends to maintain hiring via contracts (while streamlining permanent workers’ entitlements), then the government should at least reclassify contract workers without much working hour flexibility or job autonomy to be ‘dependent contractors, qualifying for commensurate pay and other benefits.
It must be said however that the measures above would still not be able to answer contract junior doctors’ demands for a permanent government job when there is a major differential between the supply of medical graduates and the number of available positions in the public sector. Greater coordination and transparency between the government and medical schools could help to manage the gap between supply and demand. Allowing placements in private hospitals could also alleviate the burden on the government in providing training opportunities
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