Series of measures including ban on employers deducting a foreign workers’ levy seen as laying groundwork for Malaysia to join Trans-Pacific Partnership

Millions of foreign migrant workers in Malaysia are to receive a significant increase in their salaries after the government barred employers from deducting a foreign workers’ levy from their wages.

The levy, along with a fee for accommodation, typically costs migrant workers on the minimum wage more than 20% of their earnings, leaving them with the equivalent of just £140 a month.

The decision is part of a package of measures announced this week by the deputy prime minister, Ahmad Hamidi, that have been seen partly as an attempt by the government to prepare Malaysia for joining (pdf) the Trans-Pacific Partnership (TPP), a 12-nation trade agreement between countries around the Pacific rim, including the US. The trade deal stipulates that any levy charged for the employment of foreign workers must be paid by employers rather than workers.

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However, the Malaysian Employers Federation has vehemently opposed the decision, citing the vow of US president-elect Donald Trump to withdraw from the TPP.

“The government says we will benefit from increased trade [as part of the TPP], but under Trump the TPP may collapse,” said Shamsuddin Bardan, the executive director of the Malaysian Employers Federation. “If [the current system was] not fair, migrant workers would not want to come to Malaysia. What Malaysia is offering them is much better than in their own country.”

In announcing the changes, Hamidi, quoted by the government’s official news agency, also cited reports that employers did not pay earnings in accordance with the minimum wage, restricted the movement of foreign workers, and kept their passports.

The decision follows recent Guardian investigations that revealed allegations of the systematic exploitation of Malaysia’s vast migrant workforce, including claims from workers that employers routinely make excessive deductions from salaries in the name of the levy.

The announcement has also been viewed as an attempt to shake off Malaysia’s reputation as a hub for human trafficking; until recently, Malaysia was the bottom-ranked country in the US State Department’s annual Trafficking in Persons (TiP) report. In 2015, Malaysia was controversially upgraded to the tier 2 watch list, a move rights groups claimed was a way to ease the country’s entry into the Trans-Pacific Partnership.

Sumitha Shaanthinni Kishna, coordinator of the Migration Working Group Malaysia, said the levy is one of the reasons for Malaysia’s low ranking in the TiP report.

“Civil society organisations [in their reports to the TiP review] … have cited the levy payment by workers as a burden and a bondage … where the employers insist in collecting the full levy and workers are not allowed to terminate the contract, even in the case of violations, until the levy is fully paid,” said Kishna. “The government is desperate to go up a tier, especially since it wants to sit in important international seats at the United Nations.”

The announcement has received a cautious welcome from workers’ rights groups. “The policy … in the past has exposed workers to exploitation,” said Angela Sherwood, a refugee and migrant rights researcher at Amnesty International. “Thus, one positive effect of removing the permission given to employers to extract levy fees directly from workers’ salaries may be eliminating such opportunities [for] unscrupulous employers.”

However, Sherwood warned that the government must commit to reducing other costs, including recruitment fees, that are part of the growing financial burden on migrant workers, in order for the policy to have a real impact on workers’ rights and wellbeing.

Some critics have voiced doubt that the policy will be enforced, given the government’s record of reversing its decisions on migrant worker policies. The government had previously ruled that employers should pay the levy, but then decided it should be borne by workers after instituting a minimum wage in 2013.

“We are already seeing employer groups up in arms over this,” said Kishna. “With elections around the corner, we may see another reversal.”