A Non-Doctrinal Study on the Implementation of Occupational Safety and Health (OSH) Legislation in Manufacturing Small and Medium Enterprises (SMEs) of Sabah

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A Non-Doctrinal Study on the Implementation of Occupational Safety and Health (OSH) Legislation in Manufacturing Small and

Medium Enterprises (SMEs) of Sabah

Sharija Che Shaari^1*, Nik Ahmad Kamal Nik Mahmod², Farheen Baig Sardar Baig²

1 Faculty of Business, Economics and Accountancy, Universiti Malaysia Sabah, Kota Kinabalu, Malaysia

2 Ahmad Ibrahim Kuliyyah of Law (AIKOL), International Islamic University Malaysia, Kuala Lumpur, Malaysia

*Corresponding Author: [email protected] Accepted: 15 December 2020 | Published: 28 December 2020

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Abstract: The manufacturing industry is important to Malaysia’s GDP, nevertheless, its contribution to the statistics of occupational accidents is alarming. Many studies have shown that small and medium enterprises (SMEs) are having difficulties coping with the Occupational Safety and Health (OSH) legislation. It is important to note that the accident rate in the Malaysian manufacturing industry has been among the highest over the years. This study is therefore intended to determine if Sabah's manufacturing SMEs understand their legal obligations as required by the Factories and Machinery Act 1967 (FMA 1967), the Occupational Safety and Health Act 1994 (OSHA 1994) and related regulations. This research uses a non-doctrinal (socio-legal) approach where legal sources (statutes, case laws, legal journals) are systematically examined and the participants' input is grouped into common themes. A qualitative approach is deployed through in-depth and face-to-face interviews to gain an understanding of the viewpoints derived out of this research. The fieldwork is carried out in major towns in Sabah, namely Kota Kinabalu, Sandakan, Tawau, and Keningau. The list of participants was obtained from the Federation of Sabah Industries (FSI) and the Department of Industrial Development and Research (DIDR). It is interesting to note that many businesses are still in the darkness of their legal duties, despite acknowledging the importance of OSH legislation. It can be summarised that the smaller the businesses, the less OSH knowledge they have. The findings do not merely fill the gap in the current literature but would enable policymakers to establish better regulations or programmes that can effectively reduce the rate of accidents in manufacturing SMEs.

Keywords: Self-regulation, manufacturing SMEs, Sabah, OSHA 1994, FMA 1967 ___________________________________________________________________________

1. Introduction

The International Labour Organisation (ILO) estimates that 2.78 million deaths annually from workplace injuries and that 2.4 million employees worldwide suffered from work- related diseases. Besides, there are some 374 million non-fatal work-related accidents per year, resulting in absences from work for more than 4 days. The direct or indirect cost of occupational accidents and illness is immense and the economic impact of inadequate workplace safety and health practises is projected to be 3.94% of the global GDP per year. While the number of injuries is going down in developed countries, they continue to grow in developing countries (ILO,2020).

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SMEs play a crucial role in the economy of Malaysia through their contribution to job creation and GDP (Lilis Surienty, Hong & Hung, 2011, Amirrudin Abdul Aziz, et al, 2015). The size of the company plays a big part in the effectiveness of OSH implementation (Cook, 2007).

However, there is no data in Malaysia that segregates workplace accidents based on the size of the company, unlike in developed countries (Yeow et al, 2020).

Table 1: Definition of SMEs by Size of Operation

Sectors Micro-Enterprise Small Enterprise Medium Enterprise

Manufacturing

Sales turnover of less than RM300,000 OR less than 5 full-time employees

Sales turnover from RM300,000 to less than RM15 million OR full- time employees from 5 to less than 75

Sales turnover from RM15 million to not exceeding RM50 million OR full-time employees from 75 to not exceeding 200

Services and others

Sales turnover from RM300,000 to less than RM3 million OR full- time employees from 5 to less than 30

Sales turnover from RM3 million to not exceeding RM20 million OR full-time employees from 30 to not exceeding 75

Source: SME Corp (2020)

The highest contributor to Malaysia’s GDP comes from the services sector. Nevertheless, it is acknowledged that the manufacturing industry is the backbone of Malaysia’s economy.

Manufacturing in Malaysia can be divided into two mainstream which is resource-based and non-resource-based. The major manufacturing industries of Malaysia includes furniture manufacturing, electrical and electronics manufacturing, food processing, chemicals, metal and machine products and apparel. The manufacturing sector contributes almost 80% of the overall country’s export. The majority of manufacturing companies in Malaysia are located in the central part of Malaysia and around the country’s major industrial regions. From 2010-2016, manufacturing contributes between 7.2-7.9% of the country’s GDP. Currently, Malaysia is one of the world's largest exporters of semiconductor devices, electrical goods, and information and communication technology (ICT) products. Despite manufacturing being the second- largest contributor to the Malaysian GDP, its contribution to the statistics of occupational accidents is alarming.

Table 2: GDP by Kind of Economic Activity at Constant 2010 Prices

Kind of Economic Activity 2015 2016

RM Million

Agriculture 97,946 106,471

Mining and Quarrying 103.716 104,695

Manufacturing 263,366 273,900

Construction 54,,138 59,785

Services 623,857 668,739

Plus: Import Duties 14,699 16,529

GDP at purchasers’ price 1,157,723 1,230,120 Source: Department of Statistics of Malaysia (2017)

Table 2 shows that the manufacturing sector accounts for 5.3% of the total establishment. The manufacturing sector is one of the highest contributors to Malaysian GDP and employs a large workforce, as shown in Table 3. The percentage has improved tremendously in the following decades whereby in the year 2016, the manufacturing sector contributes 30.1% to Malaysia's GDP and employs 27.8% of the Malaysian workforce.

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Table 3: Employed Persons by Sector

Industry 2016 2017

(‘000) (0%) (‘000) (0%)

Total 14,164.7 100.0 14,355.9 100.0

Agriculture, forestry and fishing 1,609.4 11.4 1,570,8 10.9

Mining and quarrying 96.3 0.7 109.9 0.8

Manufacturing 2,390.6 16.9 2,556.3 17.8

Electricity, gas, steam and air conditioning supply 77.9 0.5 73.4 0.5 Water supply, sewerage, waste management, and

remediation services

76.4 0.5 74.8 0.5

Construction 1,251.7 8.8 1,250.7 8.4

Wholesale and retail trade; repair of motor vehicles and motorcycles

2,428.5, 17.1 2,482.1 17.3

Transportation and storage 630.4 4.5 601.7 4.2

Accommodation and food and beverage service activities 1,260.7 8.9 1,299.8 9.1

Information and communication 208.7 1.5 208.7 1.5

Financial and insurance/takaful activities 346.9 2.4 358.9 2.5

Source: Department of Statistics of Malaysia (2017)

Rapid industrial development (particularly in the manufacturing and construction industries) has led to the alarming numbers of occupational accidents and/or occupational diseases that cause fatal death, permanent disability (PD), and non-permanent disability (NPD) as shown below. The purpose of the study is to investigate the implementation of OSH legislation in Sabah’s manufacturing SMEs as it is shown from the statistics below that accidents occurred in the manufacturing sector are rampant. It is worth noting the large workforce is faced with a high risk of accidents in the workplace which can be seen from the published statistics of the accident by the Department of Occupational Safety and Health. The statistics below show that high occupational accidents occur in the manufacturing sector which resulted in permanent disability, non-permanent disability, and death.

Table 4: Occupational Accidents by Sector for the Category of Death 2013-2019

INDUSTRIES 2013 2014 2015 2016 2017 2018 2019

Manufacturing 58 45 46 68 68 62 73

Mining & Quarrying 5 15 4 4 8 4 5

Construction 69 72 88 91 111 118 84

Agriculture, Forestry, Logging and Fishing 33 42 31 23 23 26 43

Utility 7 1 6 2 10 5 9

Transport, Storage and Communication 8 15 22 12 16 12 21

Wholesale and Retail Trade 5 6 3 0 10 1 3

Hotel and Restaurant 2 2 0 3 3 1 5

Financial, Insurance, Real Estate, and Business Services

2 4 14 14 16 22 16

Public Services and Statutory 2 5 0 6 2 9 3

TOTAL 191 207 214 223 267 260 262 Source: Department of Occupational Safety and Health, Malaysia

It is clearly shown in Table 4, the number of fatality out of occupational accidents in the construction industry consistently top the chart. Death out of the occupational accident in the manufacturing industry remains the second-highest for six (6) consecutive years. However, the position changes in the category of permanent disability as shown in Table 5. The manufacturing industry is consistently the highest contributor to permanent disability (PD) arising out of occupational accidents. It is closely followed by agriculture, forestry, logging and fishing, construction and utility services.

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Table 5: Occupational Accidents by Sector for the Category of Permanent Disability 2013-2019

INDUSTRIES 2013 2014 2015 2016 2017 2018 2019

Manufacturing 138 112 89 74 125 197 214

Construction 12 6 11 5 6 8 15

Utility 1 1 4 4 4 0 4

Financial, Insurance, Real Estate and Business Services 1 5 0 11 6 5 6

TOTAL 175 145 122 114 156 234 281 Source: Department of Occupational Safety and Health, Malaysia

A similar pattern can be seen the Table 6 below that exhibits the statistics of non-permanent disability (NPD). The manufacturing sector tops the list, leaving behind the construction and agriculture, forestry, logging, and fishing sector. Table 6 below shows that the occupational accidents which resulted in NPD occur mostly in the manufacturing industry from 2013 to 2019. The number of non-permanent disabilities arising out of occupational accidents was the highest in 2019.

Table 6: Occupational Accidents by Sector for the Category of Non-Permanent Disability 2015-2019

INDUSTRIES 2013 2014 2015 2016 2017 2018 2019

Manufacturing 1469 1510 1906 2173 1985 2969 4661

Construction 83 94 138 126 123 106 227

Utility 100 69 86 68 90 168 245

Financial, Insurance, Real Estate and Business Services 70 65 105 101 124 190 384

TOTAL 2476 2456 3009 3329 3212 4537 7444

Source: Department of Occupational Safety and Health, Malaysia

Based on the above tables, it is noted that the number of permanent disabilities and non- permanent disabilities is very high in the manufacturing industry. However, the statistics are based on nation-wide occupational accidents. Hence, a study to identify the implementation of OSH in Sabah’s manufacturing SMEs is important to contribute to greater understanding in addressing the issue of implementation of OSH legislation in the manufacturing industry.

2. Literature Review

Many studies have noted that accidents at small companies are more frequent than in large organizations (Fabioso et al, 2004; Frick, 2009; MacEachen et al, 2010; Masi, et al, 2014;

Gallagher, et al, 2016). In general, small business owners are less likely to have access to affordable safety and health assistance than those in large businesses. The studies have also identified that that size of the company matters. The studies have also shown that more ergonomic, physical and chemical risks and higher occupational fatality rates occur in small businesses (Lenz, and Wenzl., 2006; Cook, 2007). The smaller the businesses are, the higher OSH violations would be. SMEs, particularly small companies, are often particularly

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financially fragile. Hence, the owners/managers believe that investing in OSH is unattractive because the financial benefits of OSH preventive steps are not evident in the short term. Non- compliance with OSH may also occur because OSH is not seen by the management of SMEs as part of their obligation domain and/or they are confused about their responsibilities.

When policies are not aligned with working relationships in organisations, particularly in small businesses, they can be difficult to enforce. Mayhew (1994) noted that organisations with more money and expertise appear to deal more efficiently with health and safety issues. When a company's management designs a safety policy with a set of guidelines and procedures to obey, it is then up to the employees to adhere to it.

The above assertion is concurrent with the observation by Eakin (2000) that economic issues are one of the key reasons for non-compliance with the complete implementation of OSH.

Eakin (2000) conducted a study to assess the introduction of OSH in small companies was conducted by Eakin. The findings of Eakin’s study concluded that the owners of small businesses might be too concerned with cost pressures and need to be concerned about OSH every day. Eakin’s observation corresponds with Mayhew (1997) who noted that at times, the owners/managers understood and recognised safety breaches but rationalised non-adherence based on economic survival. As such, it is an efficient technique to create a healthy environment by enabling employee engagement by including them in a consultation safety committee as they are the ones involved in the daily operation of the workplace where safety is constantly an issue (Niskanen, 2013; Jilcha, and Kitaw, 2016; Gallagher, et al, 2016;

Hagqvist et al,2020). The reasoning behind employee engagement is that safety success does not rely solely on management policy and procedures, as the operational component is just as significant.

In the context of Malaysia, the manufacturing SMEs contributes significantly towards national economic development, nevertheless, the increasing number of occupational accidents seem to pose a serious problem. (Lilis Surienty, Hong & Hung, 2011, Zakaria, et al, 2012; Amirrudin Abdul Aziz, et al, 2016). There are a significant number of OSH studies in the areas of management, public health, engineering and psychology in the Malaysian context (Saad Mohd Said et al, 2012), but short of studies on OSH in manufacturing (Zulkifli, et al, 2018). Similarly, the literature on Malaysia’s OSH legislation is scarce. The previous studies on OSH legislation were mainly concentrating on the issues of establishment and enforcement of the OSHA 1994.

These studies were purely legal research known as doctrinal studies. These studies deliberated on the evolution of OSH legislation in Malaysia. The OSH legislation was originally very prescriptive through the FMA 1967. It has now evolved to more flexible legislation with the enforcement of OSHA 1994. Unlike FMA 1967 which prescribed for detailed technical provisions, the underlying principle of OSHA 1994 is based on self-regulation (Siti Zaharah Jamaludni, 1994; Xavier, 1996; Rozanah Ab Rahman, 1999, Hapriza bte Ashari &

Roshazlizawati Mohd Nor,2007; Khairiah Soehod & Laxman, 2007, Rozanah Ab Rahman, 2015). Rampal and Nizam (2006) pioneered the discussion concerning occupational health hazard. An empirical study on occupational accidents in Malaysia, however, is still lacking and mostly concentrated on the construction sector (Saad Mohd Said et al (2012). An extensive socio-legal (non-doctrinal) study was conducted by Rozanah Ab Rahman, (2004) to determine the application of OSHA 1994 in the construction sector.

Consistent with previous studies (Eakin, 2000; Fabioso et al, 2004; Lenz, and Wenzl., 2006;

Cook, 2007; Frick, 2009; Gallagher, et al, 2016), it is submitted that large manufacturing companies are more capable of controlling accidents at the workplace as compared to small

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companies. This reflects a greater level of awareness on OSH matters among large firms.

Efforts by employers from SMEs in Malaysia in promoting safety and health in the workplace are still lacking (Rampal and Nizam, 2006) possibly due to low awareness over OSH requirements (Zaliha, et al, 2008; Lilis Surienty et al., 2011; Saad Mohd Said, 2012). However, there is no data in Malaysia that segregates occupational accidents based on the size of the company, unlike in developed countries (Yeow et al, 2020).

Meanwhile, it is interesting to note that the findings derived from Lilis Surienty et al (2011) showed otherwise. Lilis Surienty et al. (2011) examined the effect of demographical variables (size of the company, type of organization and years of establishment), management commitment, external support and legislation on OSH implementation in SMEs in Malaysia.

The finding based on surveyed data of 35 companies showed the company size did not affect the implementation of OSH in SMEs. The above finding contradicted with the past studies (Mayhew, 1997; Eakin, 2000; Fabioso et al, 2004; Lenz, and Wenzl., 2006; Cook, 2007; Frick, 2009; Gallagher, et al, 2016) that showed a direct link between the company size and the successful implementation of OSH. It is irony for her study to refute the known fact that SMEs have low awareness concerning OSH requirements. It is posited that it might be due to the limited number of respondents who took part in her quantitative research. Nevertheless, the study of Lily Surienty et al(2011) found that management’s commitment is pertinent in successfully implementing and executing OSH requirements in the organization. It is further submitted here that the study of Lilis Surienty et al was not based on legal research despite the attempt of determining the implementation of OSH. The study was inclined towards the area of management.

Baba Mohd Deros et al (2012) carried out a quantitative survey 150 SMEs in the chemical industry. His findings were quite alarming as 97% of SMEs surveyed did not adhere to the OSH legislation and only 3.1% of the key personnel can be considered competent in terms of knowledge and capability to implement OSH within their respective companies. The non- adherence was caused by a lack of knowledge among the key personnel concerning OSH; the financial burden to adhere to OSH legislation and perceived low workplace risks. In lending support to the findings of Baba Mohd Deros et al (2012), Amirrudin Abdul Aziz, et al (2015) agreed that lack of financial resource will adversely affect the implementation of OSH legal compliance.

The literature review revealed that in the Malaysian context, existing research on the approach to effective implementation of OSH is still lacking. It is evident, based on the literature, that there is a void in the field which needs to be addressed urgently. It is further compounded that no literature on manufacturing SMEs relating to Sabah is available at all. Any socio-legal analysis relating to the implementation of OSH in Malaysian manufacturing SMEs or any scholarly writing relating to the situation in Sabah cannot be found by the researchers. No research on the application of OSH in Sabah, be it in business studies, engineering, psychology, and public health has been conducted to date. To the best of researchers’ knowledge, no attempt was made to undertake a study on the implementation of OSH in the manufacturing SMEs of Sabah. Hence, the gap justifies a need to conduct a study to determine the issues in implementing OSH legislation in manufacturing SMEs in Sabah. This research will also fill in the gap in the literature concerning the implementation of OSH legislation in SME manufacturing companies.

Hence, it is the objective of the study to identify the issues faced by the manufacturing SMEs in Sabah in implementing the OSH legislation at their organisation. Once the issues are

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established, it will then be possible for legislators to examine the suitability of existing OSH legislation and attempt to resolve the challenges. There are two research questions to identify the issue(s) that may emerge:

1) how is OSH perceived in manufacturing SMEs of Sabah - with particular attention to how the owner/manager practice safety in day-to-day work situations?

2) how is OSH implemented by the owner/manager in manufacturing SMEs of Sabah?

3. Methodology

This study attempts to answer the above research questions which were derived from the literature review discussed previously: whether the selected manufacturing SMEs understand their legal responsibilities imposed by the OSH regulations.

This study adopts a socio-legal method that uses a social science approach to the study of legal phenomena, hence it is multi- or inter-disciplinary in its approach. Traditionally, legal scholars deploy doctrinal research that is concerned with legal preposition, doctrines, principles and legal concepts. A doctrinal legal researcher uses statutes, rules, and cases to understand legal issues (Anwarul Yaqin: 2007).

In contrast, socio-legal scholars use the theoretical perspectives and methodologies based on research undertaken in many other disciplines, most notably from social science and humanities. Hence, the socio-legal scholars have bridged the divide between law and sociology, social policy, and economics. For the last two decades, there is increasing interest in law and disciplines within the field of humanities and social sciences. Socio-legal researchers increasingly recognise the need to employ a wide variety of methods in studying law and legal phenomena, and the need to be informed by an understanding of debates about theory and method in mainstream social science (Jain, 1982; Hutchinson, 2018; Kharel, 2018)

The research adopts a qualitative method such as an in-depth interview (IDI) to explore existing OSH practices in selected manufacturing SMEs in major towns of Sabah. An in-depth interviewing (IDI) is used to understand the subjects (the participants) through an oral assessment. This method allows great flexibility for the participants to express and share their beliefs, thoughts, experiences and so forth. This method enables the researchers to better understand the participants’ thoughts on this issue.

The qualitative method is used because the interview will enable the data to be interpreted systematically and scientifically. This method will enable the researchers to explain and answer the social phenomenon that is reflected in the research objectives. Hence, this method will enable the researcher to gain an in-depth knowledge of the participant's thoughts and understandings of the research questions. A qualitative method will enable a better explanation of the meaning, concepts, definitions, characteristics, metaphors, symbols and descriptions of research subjects. Furthermore, a qualitative study emphasises the reality of the research area or subject.

This method was deemed relevant as nothing much is discussed on the said issues within the Sabah context. This method will enable the researchers to identify the issue(s) based on the information given by the participants. This method will enable data from an identified

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population the purpose of establishing the current status of the population that may stick to the common variables or come up with the new one. This study used a systematic coding process to subjectively interpret text data content used to identify themes or patterns or to describe a social phenomenon. This method enables the researchers to understand a phenomenon in a subjective sense yet in a more scientific manner.

This study seeks to conduct an in-depth understanding of the implementation of OSH legislation in selected manufacturing SMEs located in major towns of Sabah, namely Kota Kinabalu, Sandakan, Tawau and Keningau. The list of participants was obtained from the Federation of Sabah Industries (FSI) and the Department of Industrial Development and Research (DIDR). The fieldwork was conducted Jan-May 2019 involving 34 manufacturing SMEs in major towns abovementioned.

Figure 1: Map of Sabah

4. Discussion and Findings

It is the objective of the study to identify the issues faced by the manufacturing SMEs in Sabah in implementing the OSH legislation at their organisation. Once the issues are established, it will then be possible for legislators to examine the suitability of existing OSH legislation and attempt to resolve the challenges. There are two research questions to identify the issue(s) that may emerge:

Based on the interview with 34 manufacturing SMEs which took part in this research, the findings are discussed below. The study was able to achieve its objective and to provide answers to the above research questions. The findings derived in this study conformed to the literature review (Eakin,2000; Cooper, 2006; Masi, et al,2014; Baba Mohd Deros, et al, 2012, Amirrudin Abdul Aziz, et al,2015; Yeow et al, 2020)

It is observed that the small companies are usually owned by a family, hence the owner is also the one who managed the company. The owner/manager is the one responsible for various tasks to ensure the sustainability of the company. The owner/manager is responsible to do the planning, oversee the company’s finance, dealing with staff and supplier, and day-to-day activities of the company’s operation. The organisational structure of SME companies typically conforms to a small structure with a director who is normally a financial manager and often functions human resources manager as well. Most of the time, matters concerning OSH are

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overlooked in favour of other pressing matters to ensure for the economic survival of the company.

Gilkey et al (2003) acknowledged the importance of managerial commitment in achieving successful implementation of OSH at any workplace. The top management must be committed to creating awareness of OSH and ensuring that OSH legislation is adhered to. It is the top management who has the power to allocate the budget for OSH activities to ensure the successful implementation of OSH legislation (Cooper, 2006; Lilis Surienty et al, 2011).

Effective implementation of OSH would allow good safety behaviour to be established. This is because the introduction of OSH regulations requires the involvement of employers in meeting the safety needs of their employees.

The study findings show that the OSH is well-perceived by the majority of the owners/managers of manufacturing SMEs. Majority of the participants agreed that the employees’ safety awareness, efficiency, productivity and quality of work will improve through the implementation of proper OSH. This finding answered the first research question - how is OSH perceived in manufacturing SMEs of Sabah - with particular attention to how the owner/manager practice safety in day-to-day work situations?

Sadly, good perception has not been translated into better compliance with the OSH law. It is found that conformity is still poor among participants who took part in this study. Most of the participants were owners/managers of small companies having less than 75 employees. A vast majority of the owners/managers in the manufacturing SMEs surveyed claimed that they do not understand what is expected from them and they did know how to implement OSH requirements within their organisations. The majority of participants stated that their implementation of OSH at their respective workplace was straightforward and neither well prepared nor properly coordinated. Thus, it answered the second research question - how is OSH implemented by the owner/manager in manufacturing SMEs of Sabah? This finding lends support to the findings derived from previous studies ((Lenz, and Wenzl., 2006; Frick, 2009; Baba Mohd Deros, et al, 2012; Masi, et al; 2014; Amirrudin Abdul Aziz, et al, 2015;

Yeow et al, 2020)

The issues faced by the participants are as illustrated below:

Figure 2: Summary of the findings

Apart from a lack of understanding, the manufacturing SMEs have a lack of resources.

Resources are identified as time constraints, not having good and skilled staff and also financial constraints. To them, safety and health are considered as a cost rather than an investment.

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Majority of the owners/managers shared that they did not have specific or formal training on OSH. Most of the training was done by observing the seniors on how to perform the job. The management claimed that they conduct on the job training which can be labelled as “learning by doing”. The lack of willingness to conduct proper training is evidenced by the high turnover of employees, apart from the lack of understanding of OSH on the part of the owners/managers themselves. To them, it is pointless to spend time and money on training as they are facing retention problem.

Section 15(2)(c) of OSHA 1994 provides that it is the duty of the employer, so far as is practicable, to provide information, instruction, training and supervision as is necessary to ensure the safety and health at work of his employees. Between the year 2013-2018, there were seven (7) manufacturing companies in Sabah were found guilty under section 15 OSHA 1994 for their failure to provide to the standard operating procedure (SOP) for the employees to carry out their duties safety or properly supervise the employees.

Another issue highlighted by the participants is the burden of compliance. This is evidenced by the statements below:

KK01: All these laws cause headache

KK02: Too much time for reporting the accident….we have to report for any accident at our factory, otherwise, we will be compounded

S05: My factory use chemicals…..so we have to fill in Data Sheet….we have to label and proper storage. It is time- consuming.

To them, they would prefer to be told what to do. This is prevalent in companies that have low educated employees (those who do not have a minimum education of SPM which is equivalent to O-Level). It shows that the participants do not understand what is expected of them.

S04: Before I open this company, I work with others. I just bring good practices which I learn elsewhere to my company.

KK07: I have a small company. I have no idea what is the best practices in managing safety and health. All I know, the staff must pay attention when doing work.

KK11: My workers resign anytime they like. How to train them?

KK12: Most of my workers did not even finish form 5. Some have a problem with reading. Very difficult to train them

KK19: The senior or the most experienced will explain to the newcomer how to handle the machine. So the junior follow only.

S06: I do not give training as I also do not understand and I do not have time. I have to make sure the clients’ order can be met in time. That is my priority.

T2:

S1:

Very costly to send workers for training and if I send one or two to go for training, we will have less staff at the factory.

All these laws are to be translated to suit our workplace situations….not that easy and at times not practical…what more to say of the time spent and its cost.

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Section 16 OSHA 1994 provides that a company that has five or more employees shall have a safety policy in place. Safety policy is an employer’s undertaking to ensure compliance of OSH regulation at the workplace. It is established that manufacturing SMEs, in particular small enterprises, are not aware of the safety policy, the need to set up a safety committee if the number of employees is 40 or more; and the legal requirement to report to DOSH in the event of accidents (including near-misses), hazardous events and poisoning; and occupational diseases. There are even businesses which have more than 40 employees who are also ignorant.

Section 17 (1) OSHA 1994 provides that the employer has to ensure, so far as is practicable, not to expose persons other than their employees of any risks to their safety or health. Section 18(1) OSHA 1994 provides for the duty of an occupier to persons other than his employees to ensure that the premise is safe and without health risk. The penalty for any contravention of section 15, section 16, section 17 and section 18 is provided in section 19 which states that a person who contravenes the said sections shall be guilty of an offence and shall, on conviction, be liable to a fine not exceeding RM50,000 or to imprisonment for a term not exceeding two years or both.

The researchers have examined the list of cases involving occupational accidents at manufacturing companies in Sabah that had been prosecuted by the Department of Occupational Safety and Health for violations of OSH legislation. The list contains brief information such as the companies that are prosecuted, which court the company is tried, the charge, the date and the penalty. The researchers select the cases (from the year 2013 until 2018) that have been tried in the court of law. The researchers are not able to identify the category of the company whether it is a large or medium or small enterprise due to lack of information provided on the website. There are nine (9) prosecutions involving non- compliance of OSHA 1994. The cases can be divided into four (4) categories of non- compliance:

i. failure to provide a safe system of work, section 15(2)(a), ii. failure to provide supervision, section 15(2)(c ).

iii. failure to ensure safety to persons other than his employees, section.17 and iv. failure to comply with improvement or prohibition notice, section 59

Most employers are mainly prosecuted for their failure to ensure so far as practicable the employees’ safety in performing their job. Many of the companies which are prosecuted neither provide a standard operating procedure (SOP) for the employees to carry out their duties safety nor properly supervise the employees. Nine companies were found guilty for non-compliance of OSHA 1994 and they were ordered to pay fine only. Seven out of nine (9) companies were found guilty for breaching the employers’ duty to ensure the safety and health of their employees as provided by section 15(1) OSHA 1994. These companies were fined between RM8,000 to RM25,000, mainly for the failure to provide supervision or safe system of work including failure to provide standard operating procedures (SOP) or failure to provide fencing for dangerous machinery. One company was slapped with a fine of RM7,500 for its failure to comply with a notice of improvement notice or prohibition notice as provided by section 49(1) OSHA 1994. There is one company that was slapped with a fine of RM7,500 for failure to ensure the safety of persons other than his employees, as [rescribed by section 17 of OSHA 1994. The researchers believe that the penalty imposed by the court is low considering the maximum penalty provided by section 19, OSHA 1994 is a fine exceeding RM50,000 or imprisonment not exceeding five years or both.

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Section 30 of the OSHA 1994 provides that a company that has forty employees shall establish a safety committee that comprises of representatives of the employer and employee. The safety and health committee enables and assists consultation and cooperation between employer and employees on safety and health matters. help initiate, develop and implement safety and health measures. Meanwhile, NADAPOD (Notification of Accident, Dangerous Occurrence, Poisoning and Occupational Disease) is provided in section 32 of the OSHA 1994. It is about reporting of an accident (including near-miss), any dangerous or poisoning occurrences and any occupational disease such as asthma, dermatitis, carpal tunnel syndrome and so forth. Some companies do not establish a safety policy or a safety committee despite having employees above the threshold. If they do not have a safety committee in place, an alarm sounds as to how are the OSH rules being formulated? The results show that many businesses are still in the dark concerning the implementation of OSH. It defeats the underlying principle of OSHA 1994 to encourage self-regulation among the stakeholders.

Between 2013 and 2018, there are four (4) companies who were prosecuted for the violations of section 5 of the Occupational Safety and Health (Notification of Accident, Dangerous Occurrence, Occupational Poisoning and Occupational Disease) Regulations 2004 (NADOPOD), These companies were being fined between RM1,000 to RM5,000. One company was found guilty and fined RM8,000 in 2018 for its failure to review written assessments of the risk arising from chemical hazardous to health as provided by regulation 10(b) of Occupational Safety and Health (Use and Standards of Exposure of Chemical Hazardous to Health) Regulations 2000 (USECHH). The regulation stipulates that the assessment must be reviewed if more than five (5) years have elapsed since the previous assessment.

As earlier mentioned, the Factories and Machinery Act 1967 is still applicable despite the enforcement of OSHA 1994. In the event of any discrepancy between these Acts, OSHA 1994 will prevail, section 2(2) OSHA 1994. Between the year 2013-2018, there were only two prosecutions for violation of FMA 1967. One company was fined RM15,000 for operating a steam boiler without a valid certificate of fitness, section 19(1) FMA 1967. Another company was fined RM5,000 for its failure to ensure that the steam boiler is operated by a certified person, section 29 FMA 1967.

It can be seen that many SMEs, unfortunately, do not place OSH as their priority. They do not have a preventive culture. Rather than trying to prevent accidents from occurring in the workplace, they would rather wait for something to happen. The paper concludes that the importance of OSH is understood by a majority of owners/managers, but admitted poor implementation due to factors abovementioned.

5. Conclusion and Recommendation

In short, it is enough to acknowledge that OSH studies can be in the form of multi-disciplinary studies. The bulk of OSH studies are carried out in the fields of business studies, engineering, psychology, and public health. A few attempts have been made to perform a doctrinal analysis on OSH, but it is rare for a perform a non-doctrinal legal analysis on OSH. No research on the implementation of OSH legislation in Sabah, be it in business studies, engineering, psychology, and public health has been conducted to date.

The role of the government alone will not lead to ultimate success. The government has strongly encouraged harmonious employment relations. Thus, OSH is one of the major

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features of employment conditions. Safety performance can be a good indicator to reflect the state of employment relations in a particular organization. Cooperation from all players in the industry, in particular, is therefore necessary, such as employer-employee cooperation and tripartite enforcer (government), players (industry) and stakeholders. It is recommended that DOSH and NIOSH conduct further awareness programmes (in the form of seminars and training) for the owners/managers of manufacturing SMEs and their key employees as well.

The researchers further argue that it is important to reconsider the current implementation of OSH in manufacturing SMEs and to pursue a new approach to technology advancement.

Nevertheless, it is reiterated that the needs and requirements of OSH may vary depending on variables such sector, size of business and employment relations that exist in the respective organisation.

The primary focus of the manufacturing SMEs of Sabah is still on the consistency and productivity of goods that compromise the implementation of OSH legislation at their respective organisation. Poor OSH implementation has been documented in SMEs due to a lack of OSH awareness, exposure and resources in terms of finance and a competent workforce.

The need to enhance awareness of the issue of OSH interventions is important for SMEs because, compared to larger enterprises, they face worse OSH conditions and have limited resources be it physical, economic and organisational resources. Therefore, SMEs strongly need to focus their limited resources. When employers and their employees are more attentive to safety concerns or have good safety behaviour, occupational accidents can be prevented.

Successful OSH implementation may also minimise the number of injuries and thereby lower the compensation paid.

In terms of financial resources, most SMEs cannot internally provide and build a safety programme to comply with OSH enforcement as opposed to a large business. To implement OSH, considerable financial resources are needed and it is a huge investment by a company.

Once a business spends its money, it expects the return from the investment. Large organisations have the advantage of having more staff, hence various OSH awareness programmes and training can be organised that benefit the employee and the organization as well. Despite acknowledging the importance of OSH legislation to reduce occupational accidents, many manufacturing SMEs of Sabah perceived OSH implementation as insignificant due to their limited resources. To them, what matters most is to make a profit. To them, OSH implementation will be burdensome. It is further exacerbated when they believe that OSH implementation will add to their operating cost. Therefore, OSH seems to be of little value for SMEs to remain competitive and to thrive with limited resources. Lest they forget that prevention is better than cure. The preventive culture is yet to exist in the manufacturing SMEs of Sabah that participated in this study. It can be summed up that the smaller the businesses are, the less knowledge of OSH they have. The findings do not merely fill the gap in the current literature but would enable policymakers to establish better regulations that can effectively reduce the rate of accidents in manufacturing SMEs.

In conclusion, the findings of this study give a clearer picture of what is happening in manufacturing SMEs of Sabah. The usage of non-doctrinal legal analysis creates a deeper understanding of the shortcomings of the implementation of OSH in this sector. With due respect, such an understanding would not be obtained if the study merely uses the traditional doctrinal methodology that has been commonly used in legal research. Nevertheless, it has to be cautioned that these findings can neither be generalised nor represent the situation of Malaysia as the study was only conducted in major towns of Sabah. It is further recommended for the researchers to undertake a nationwide study on this issue

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