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Evaluating organizations industrial relations: Carmaker NAZA

University: Open University Malaysia
Code: BMPR5103


Carmaker Naza Lays Off 300 At Kedah Plant

Three hundred workers today lost their jobs at the Naza plant in Kedah that assembles Peugeot and Kia cars as poor car sales begin biting the country's auto industry. Car sales nationwide slipped in July to 58,646 units from 60,269 units in the same month last year, according to statistics from the Malaysian Automotive Association (MAA).

From January to July this year, the total sale of vehicles was 380,830 units down from 393,425 units in the corresponding period last year.

The association had previously predicted that sales of vehicles this year would be lower than last year due to the introduction of the goods and services tax in April, with consumers adopting a 'wait-and-see' approach. The lay-off at Naza Automotive Manufacturing (NAM) Sdn Bhd involved 225 staff members, and 30 from the NAM Committee. The remaining employees who lost their jobs were administration staff. The affected employees were given a farewell party earlier today at Dewan Seri Zaleha in Gurun, Kedah.

According to the programme of the event, the farewell party was attended by NAM chief operations officer Roslan Abd Ghani and a labour department officer. At the event, the laid-off staff also received their termination letters. Attempts by The Malaysian Insider to contact the NAM head office in Kedah for confirmation of the lay-offs did not receive any response.

  1. Based on the above scenario, as an experienced Industrial Relations Officer, what alternatives or range of possibilities would you propose to Naza or other organisation to prevent the termination exercise? Support your answer with relevant examples.
  2. Examine how concepts of fairness and equity and power and authority are related to the above case?

QUETION 2 – short report 

Write a short report of the following Industrial Relations issues / challenges:

  • Minimum wage for workers
  • Quality of Union-Management Relationship
  • Retrenchment 
  • Impact of globalisation / market liberalisation
  • Constructive Dismissal 


Question 1: Case Study

a. Alternatives or range of possibilities that can be proposed to Naza or other organization to prevent the termination exercise:

Malaysia has been suffering from a huge economic crisis which could be evidently noticed during the years 2007 to 2009. The main crisis could be observed to be affecting the whole of the automobile industry. The automobile industry could be said to be suffering from mainly the cause of the introduction of the goods and service tax in the month of April (Sturgeon & Van Biesebroeck, 2010). The introduction of this taxation system led to huge rise in the price of the automobiles leading to the huge level of fall in the sales of automobile in the present context. Many people had lost their employment due to this crisis and the automobile industry has been suffering from the cause of huge level of unemployment. 

Many automobile companies at that time have terminated many of their staffs from the jobs and the Naza Automotive Manufacturing (NAM) Sdn Bhd can be said to be one of those automobile manufacturing companies which has terminated many of its employees. 

Figure 1: Fall in employment levels during 2007-2009 in Malaysian automobile and spare parts industry

(Source: Athukorala &Waglé, 2011)

From this study, it can be observed that the employees have been told to attend seminars where they shall be provided with their termination letter and all of their dues shall be cleared and the salaries shall be paid off to them with some level of compensations. The company did not take any kind of effective steps in order to save the employment of those individuals. The most of the people getting unemployed can be said to be belonging from the departments such as the NAM committee, administrative department and other staff members. 225 staffs from the staff members group, 30 employees from the committee for the company and other many staffs from the administrative department lost their jobs. It can be deciphered to be a big number of employees who lost their job (Jayed et al. 2011)

The company could have easily taken some mind of alternatives in order to save the employments of so many people. It can be said to be great disaster for the whole economy if so many people lose their job. It can be well explained with an example. The company could have easily taken up steps to manufacture more low cost cars. Despite the high level of taxation, if the prices of the cars would have been less, then comparatively the taxation on the cars would have been also less or would have been charged in a less rate. Thus, the whole situation would have been much better leading to fewer falls in the sales of the cars. If the prices of the cars would have been less, more number of people could have easily adhered to buying of those cars, leading to constant sales in the automobile industry. The other companies could also have taken some or the other kind of alternatives or ways to save the jobs of so many people. They could also have conducted further research and development in order to find some technology to make low cost cars and deliver them to the people at low prices. The cars would have a standard cost at a price much lower than the previous prices the pope would have easily keep on purchasing the cars leading to increase or constancy in the overall sales of the cars (Azlina Mohd. Salleh, Kasolang  & Ahmed Jaafar, 2012). Then people would have never lost their jobs. Further, the NAM Company could have also taken some other decision to manufacture other kind of vehicle or produce any kind of parts that are related to the manufacture of cars. If this decision would have been taken, then the company would not have to face the consequences of high taxation. This would lead to the prices remaining constant and the sale of the cars would never have fallen at such a great extent. Thus, never the people had to lose their jobs.

b. Concepts of fairness and equity and power and authority in relation to the above


The overall case can be related to the different concepts of fairness, equity, power and authority. The case has many instances where fair decisions have not been taken in the NAM Company and the right kind of justice has been not provided to the total employees both the company. The question of fairness arises here as the employees have not provided with any solid reason for their termination. It can be said that the whole of the automobile industry has been suffering from kind of crisis and that many of the people have lost their job due to this (Chowdhury, 2011). Still, the company could have taken other steps in order to save their job. They could have taken different alternative steps in order to provide a better conclusion to the whole story of disaster and unemployment have taken the steps. They did not provide the employees with reason why they were terminated nor they were provided with good level of compensations or with other kind of backup options in order to support their lives. 

Further, it can be easily seen that the higher officials like the chief operations officers and the labor department officer did not lose their job. They are still readily employed interior respective posts. Here arrives the question of equity and fairness. Here, the question of power and authority also comes. As they have more power at their hands and they have a greater authority in the whole management body of the company, they did not have suffered from the consequences of the unemployment disaster. Only the employees at the grassroot levels of the company have to lose their jobs due to this incident in Malaysia. Further, the senior officials in NAM head office in Kedah gave no responses to the Malaysian Insider when they were sent a report for giving the confirmation regarding the layoffs. Thus the company and its higher officials in the whole case acted in a much biased, unfair and unethical manner (Rasiah, 2011)

Thus the whole of the case and the incidents that took place can be well related to the concepts of fairness and equity as well as the concepts of power and authority. High instances of injustice, unfair means, inequity and the wrong use of power and authority can be seen in many places in the whole case study. 

Question 2: Impact of globalization / market liberalization


The essential component that shapes the notion of liberal market can be extracted from the apprehensions of Adam Smith where the author aspires to project a market (which is potentially eutopic) that has been chiefly governed by the pursuit of free trades. Though it is a vain attempt to illustrate Globalization as the advent of Liberal Market, on the reverse, the enquiry regarding globalization can be pursued in terms of liberal market since free trade is extensively considered as a prominent and reliable trait of globalized economy. Since it took almost a century to draw the fantasy of liberal market into a volatile economic paradigm, in most of the pertinent literature, the term liberal is justified by the fact that the underlying market is free from any sort of artificial legislative imposition. The global aftermath can be summarized in terms of the significant alterations that the Malaysian economy has undergone where the direct foreign investments started ruling the market and might be posed as a potential agent to cause the inequality of income that has been rife over the years. This recurring study is supposed to incorporate every nuance of the inter-relationship that significantly lies within the notions of Globalization and Market Liberalization on the backdrop of flagrant alterations of economic principles that are prevalent in Malaysia. Furthermore, this study caters the obligation to evaluate the potential impacts of globalization and market liberalization against the events that governs the current market status of Malaysia in global economic standards. 

Analysis and detailed discussion on the topic:

Background of the Study- The Malaysian economy encountered various kind of negative as well as positive impacts from the total incident of Globalization and market liberalization. The country Malaysia had to encounter different kind of negative as well as some positive impacts. 

It has been observed that during the post 1970s phase, the overall available laborers increased to a great extent in the country. Due to different kind of economic problems faced by Malaysia, the Malaysian economy needed an overall change. The need for change can also be related to the availability less employment in the country and less number of manufacturing sectors in the country. People were suffering from huge level of unemployment and the country was mainly dependant agricultural sector. The labor force availability in the land increased from 3.7 million which could be noticed during the 1970s to an amount of 9 million in 1990s (Razak, 2011). On the contrary, the avalaibility of jobs in the different manufacturing and service sectors were not adequate to support the living of such great number of workers. Thus an effective economic reform was necessary in the nation. Due to this, the Government took different kind of steps to liberalize the economy during the 1980 and this led to different kind of negative as well as positive effects.

Positive impacts of Globalization on the overall Malaysian economy- Globalization and the liberalization led to different types of positive impacts on the Malaysian economy. During the era of 1970s, Malaysia was seen to be having a much less rate of employment. Most of the people had to suffer from acute level of poverty and the income earning learning opportunities can be termed to be restricted. However, with the introduction or globalization in the whole economy and the reform of the whole economy led to the increase in the employment opportunities. Many foreign companies came and entered into the Malaysian economy and started with their business activities. This led to the increase in the employment opportunities as more number of people was required by the companies to do with all the manufacturing, sales as well as administrative activities. The unemployment rate initially increased due to some adverse effects of Globalization on the domestic industries. However, during the post 1990s phase, the level of employment started to increase and unemployment level fell from 6 to 2.8 (Idris, Dollard & Winefield, 2011). This positive change in respect of employment can be well related to the facts of usage of effective and modern technology for production and marketing, providing better educational and training facilities to the workforce, overall, modernization adopted and used in the different sectors. Further, the overall administration of the public and private sector industries were developed to large extent in this phase. This led to their increase in the level of employment in the country. The adoption of Malaysian New economic policy from the year 1971 to 1990 and the effective adoption of national Development policy in 1991 led to different kind loft contributions sin the whole economy. The overall level of poverty in the country fell at a great rate from 49.3% to 8.9% in the year 1995 (Arokiasamy, 2011). This can be said to be considerable figure and this became possible because of widespread globalization of the Malaysian economy. The linear trade policies and the decrease in the taxation rate by the Government attracted huge level of foreign investment in the country. 

The overall GDP and the GNP of the country also increased to a large extent. The hare of the manufacturing sector in the overall GDP of the country got boosted from a rate of 13.4% in 1970 to around a total of 35.7% in the year 1995. This can be specifically termed to be the positive impacts of Globalization and liberalization of the market. In addition, the overall contributions provide by the exports and the different kind of imports made by the country on the GNP increased to a certain extent off 77.3% in 1970 to an total amount of around 169.2% in the year of 1997. Malaysian succeeded to be at par with the global economies and the different kinds of industries in Malaysia were slowly and slowly becoming more integrated with the world economy.

The market became flooded with all kinds of convenience goods and this led to huge amount of competition to be faced by all the sectors in the economy. This led to the urge of bringing proper change and development in the different kind of products and the services that were available in the country. The overall globalization led to leniency in different trade barriers that were set up by the government during the period of 1970s. The economy got open and the amount of investment in the economy increased to a great amount. Many foreign companies came to the country and started with their manufacturing and service rendering activities, This led to increase in the level of competition in the country’s market. The customers started demanding good quality goods and services at convenient and lesser amounts of prices. They wanted highly technology goods and services that could match all of their needs and demands. The rate of saving in the economy increased from 19.2 in 1975 to 35.3 in the year 1995 (Zhou, Biswas, Bowles & Saunders, 2011). People started to save and the overall economy of the nation developed to a large extent. While the level of investment increased from 24.2 in 1975 to 45.7 in the year 1995 (Kamyabi & Devi, 2011). Different sectors increased their overall investment in the whole of the economy and due to this better services and goods started to be available coupled with huge employment opportunities. Better technologies started to be used and better research and development were conducted by the companies. This required the employing of skilled and knowledgeable work force in the economy. The overall education system started to develop and the availability of skilled and knowledgeable employees started to increase in the economy. The overall productivity of the workforce in the whole of the country increased by a rate of 3.6%. 

In Addition, more amount of gender equality could be ensured in the economy. The women participation in the workforce increased from a rate of 37.2% in the year 1970 to around 46.7% during the era of the 90s (Yoshino, 2010). The development can be well relation to overall ensuring of equity in sector of gender as well as earning opportunities. The overall income of people increased to some extent. The overall poverty rate fell from 49.3% to 8.9% in 1995 (Ju & Wei, 2010). The income of the middle class fell to some extent and the income of the poorer sections of the society increased to some extent. This became possible due to the increase in the level of employment and investment in the overall economy of the country. However the income of the households remained more or less constant. 

The market became more lenient and diverse. The market of the country gave hue opportunities to may business organization to freely enter into the Malaysian economy and do with the business activities. They were easily given with the trade licenses in order to freely do with the trade in the country. This encourages the overall trade and commerce in the country. The overall trade relations ships of Malaysia developed and in the international political dimension, Malaysia succeeded to hold some grounds. The overall exports level of Malaysia increased to great extent and due to this the country could earn a lot. Further, as mentioned previously, the country could get a good hold and secure place in the International Political domain. This led to the increase of the stake of the company in the global aspect and the overall economic and financial as well as political power of Malaysia increased to a considerable portion. The country could succeed to trade in its different kind of products such as tin, timber, petroleum oil, rubber and palm oil. The overall GDP and the GNP of the economy was contributed by the manufacturing and service sector. The overall contribution made by agricultural sector decreased to a acreage and mentionable extent. This can be said to be good at some extent as over dependence on agricultural sector can lead to uneven GDP and income for the country. It is because Malaysia continues with its agricultural using comparatively old methods and the availability of artificial irrigation facilities is less seen in the country. This would have led to fluctuations in GDP and income if in some year, the rainfall would have been scanty and would have been much more leading to the destruction of crops. 

Figure 2 and Figure 3: Effects of Globalization on the Malaysian economy

(Source: Lambin & Meyfroidt, 2011)

Negative Impacts of Globalization on the overall economy of Malaysia: Apart from the blisses that the notion of globalization has endowed the Malaysian market with, there are some adverse impacts that one of the governing quotient of liberal economy has posed that underlines the significant shift of the Malaysian economic principles. The flagrant fluctuations in the statistics of actual growth of GDP can also be served as the evidence that consolidates the aspect of alteration in the global economic principles of Malaysia. It happens to be an exaggeration to admit that the prevalent openness that the Malaysian economy is chiefly endowed with facilitates the practice of import and export and this statement can further backed by the proclamation that the shares acquired from the imports and exports contributes the optimum moiety in the GNP. The introduction of the global financial principles enables to exhibit a considerable leap in the shares of manufacturing industries that subsequently caters the process of stabilization of the GDP as well. This apparent promotion of globalized economy can be smeared by the event that the abovementioned leap has been superimposed by where a flagrant decline in the share that has been principally posed by the agricultural industry (Crane & Matten, 2016). The sheer ignorance that the concurrent Malaysian Government has been posed on this aspect of their economic principles dispenses their wish to integrate with the global economic structure while enabling the dissolution of their prevalent economic structure. In this regard, it can be admitted that this demeanor of the Malaysian government caters the cause of inequality in incomes and the discrepancies in pay matrices that has become rife yet dormant in terms of financial concern. In the incipient years of rapid ( rather abrupt) globalization, the proportion of liberty that the prevailing market enjoy has significantly increases in the expense of several service sectors as they are not compatible enough to cope with sudden economic alterations. The manufacturing industries somehow managed to adjust employing several revival strategies but fails to sustain in the current market marked by foreign competition and aggressive hostility (as per the statistics, though the manufacturing industry managed to contribute near about 46% in the GDP in the year of 1975, it has considerably deteriorated in 44.8% in the year of 1998) (Anwar & Cooray, 2012). Most of the domestic amenities that Malaysia is prone to deal with, such as the industries of Tin, Rubber, Palm oil and Crude Petroleum, have faced a considerable collapse in the advent of globalization since the majority of investments and the subsequent cost structures began to be conditioned by the foreign multimillionaires who does not have a peck of the market sentiments of the Malaysian market. 

The market and the consequent GNP of Malaysia owes a considerable share from the import services to foreign entities, but direct external investments started acting as a potent impediment in the way of seamless import service since most of the foreign investors began to treat the market in the spirit of colony that the intent of free trade vehemently wishes to address. The corresponding export services appear potentially unable to compensate the decline that is principally caused by the reduction of shares that the import services are prone to offer to the cumulative GNP of the country. As per the statistics of the recent history, the import services of Malaysia, which chiefly orients itself within the premises of Insurance and Consultancy services, fails to replicate their prevalent history and the share dropped by almost 4.6% within the course of 1970 to 1975 (Rodrik, 2011).

The boom of open-trade with literally no legislative obligation encourages the foreign agents to exercise the market of Malaysia while enforcing it to be conditioned with the impulse of their own sake and the subsequent glorification of the liberal market that the malaysian government are extensively seen to be involved with indulges the youth inflicted with discrepancies of wages to develop an understanding that they are destined to be like that while the privileged section appear eager to give consent to corruption in order to justify their growth of capital.       



The fantasy of liberal market has advocated the evolution of manufacturing industries of Malaysia while attempting to condition their economy to endorse the global sense of economic boom while refusing to rely on their typical sectors of concern that has been the driving force of their economic infrastructure across the era of pre-globalization. The popular national means of capital and their considerable shares in Malaysia appear to succumb since the economical infrastructure of Malaysia appear prone to patronize the global means that ensures growth of capital while undermining their capability of production. The financial undernourishment that the public sectors are inflicted with appear impotent to bother the relevant authorities since they are engaged celebrating the conceits of liberal economy and globalization.   

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