Tuesday 06 Jun 2023
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This article first appeared in Forum, The Edge Malaysia Weekly on May 4, 2020 - May 10, 2020

The risk of human rights violations has drastically increased during the coronavirus outbreak because some irresponsible, incompetent governments fall short of what it takes to perform their obligations to respect, protect and fulfil international human rights during these challenging times.

Of great concern is deriving economic benefits from human rights violations, which is plausible, as suggested in our scholarly work titled Regulatory arbitrage in relation to international human rights, published in the Journal of Human Rights. This work, initially written at the law school of the London School of Economics, introduced government actors as regulatory arbitrageurs, in which their prioritisation of economic interests may undermine human rights.

It is feared that prioritising economic growth amid the Covid-19 pandemic could reduce humanitarian values to economic values. For a greater sense of what is at stake, should a government allow more businesses to resume and more people to go back to work while the coronavirus is still spreading?

In Malaysia, for example, an additional list of businesses was recently permitted to resume operations under the extended Movement Control Order. It is difficult to rule out that this decision was not founded on economic motives and incentives. Although standard operating procedures have been imposed, full compliance is not guaranteed if the effectiveness of enforcement can be challenged.

Our rights are government’s obligations

From a legal perspective, a government’s performance is benchmarked against human rights fulfilments. If government actors do not have adequate knowledge in dealing with human rights matters, they should be enlightened or reminded of the government’s obligations to respect, protect and fulfil international human rights agreements.

In particular, Article 25 of the Universal Declaration of Human Rights states that “everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social services, and the right to security in the event of unemployment, sickness, disability, widowhood, old age or other lack of livelihood in circumstances beyond his control”.

Exercising our right to “a standard of living adequate for the health and well-being” can never be more important than now, under these unprecedented, challenging circumstances that are beyond our control. Now is an ideal time to test a government’s competency in dealing with our rights. The resilience of government actors was never tested during good times. During the present time, grave mistakes in decision-making will cost lives.

If the government is seriously prioritising the health and safety of the people, the most suitable place for the people during the spread of the coronavirus is home, not travelling to other places unless it is essential. The buzzwords, “essential” and “basic needs and necessities”, are not to be abused to achieve economic ends. Adding more items to the “essential” list is equivalent to exposing more people to deadly risk as they leave home to work.

Understandably, measures to break the chain of coronavirus infections have disrupted employment, businesses and other income-generating activities. As people in the underprivileged category are the worst affected, the security of these people must be protected by the government. The security of the vulnerable people is our concern here as they may not even be aware of their own rights and the government’s obligations.

In the event of unemployment, it is the government’s obligation to fulfil the right to security of the people who have lost their jobs. In the UK, for example, those on furlough could get paid 80% of their wages, up to a monthly cap of £2,500. This can be compared to a smaller one-off handout to everyone in Malaysia, where people are also nudged to seek refuge in their own retirement pot (for example, the Employees Provident Fund).

If a country has the comforts of a healthy financial system, strong domestic institutional investors, adequate buffers and robust policy frameworks, then why the rush to permit an additional list of businesses to resume during the extended MCO? If the banking system has accumulated adequate buffers, as is claimed, then kindly extend the moratorium, or offer more generous debt relief for those worst affected and in greater need.

Directors’ pay and the shared prosperity vision

One may assume that overpaid directors, bankers and those with excessive perks and benefits at “financially sound” government-linked entities (GLEs) are generally better able to weather the prolonged MCO period.

Our previous work in collaboration with the Consumers Association of Penang suggests that on average, each GLE executive director has earned as much as the total wages of 308 minimum-wage employees (see our book How Much is Hidden: Pay for Elites in Government-linked Entities, launched last October). Although this research was restricted to limited disclosure of GLE directors’ pay, it provides a conservative estimate of the prosperity of the elites.

The economic implications of Covid-19 provide a great opportunity for highly paid elites to walk the talk on shared prosperity. Shared Prosperity Vision 2030, which was launched in Malaysia, is in line with the 2030 Agenda for Sustainable Development Goals adopted by all members of the United Nations.

From a socially responsible perspective, those in stronger financial positions are supposed to shoulder a greater responsibility to share their prosperity. For this reason, a contribution that is greater than a negligible percentage of income, or sacrificing a significant percentage of pay, is welcome. As an international point of reference, the CEO of the world’s largest hotel chain, Marriott, was reported by Forbes to have relinquished his salary for 2020.

However, taking a temporary salary cut is not enough because perks, benefits and unjustifiable variable pay in combination can be greater than the salary. Therefore, more is expected from the elites to reduce the gap between the rich and the poor during this time of need.

Perhaps some highly paid elites at GLEs in Malaysia are now humbled by the fact that the “financially sound” status of some GLEs is conditional upon the market price of crude oil, availability of government grants or even bailouts — little to do with real performance. Therefore, if the directors’ fees, emoluments and remuneration at a GLE was RM30 million previously, to reflect prevailing market conditions, then should they still be paid millions of ringgit now with the ailing market conditions?

Although we are fully aware that financial crises are a recurring event, a calamity of this magnitude was perhaps beyond the prediction of a risk model. The ever-inflated size of financial markets once again struggles to resist the power of gravity. The speculatively driven values of financial assets and structured securities, substantially backed by credits, have been reduced by a significant proportion and revealed the real value of humanity.

Our real value is life. All lives are equally valuable. One person’s life is as valuable as yours, although the lives of a select few are or were (mistakenly) excessively priced more highly than the others. While those enjoying high pay can afford to stay at home, many low-paid workers may soon be exposed to a greater risk of coronavirus infection as more factories and construction sites will be permitted to resume operations. Would the workers (and their households) be adequately compensated for bearing greater exposure to deadly risk? What about compensation for low-paid frontliners too?

Challenges ahead

Because life is priceless, governments should be held accountable for grave errors in decision-making. A government that failed to respect, protect and fulfil its citizens’ right to security should let those with the required competency take over. Incompetency is costly and has taken many lives. Incompetency in dealing with health and safety issues, such as shortages of personal protective equipment for frontliners, which happened in many countries, has taken its toll.

Criticism from the public is part and parcel of governing a country. No one is perfect and for this reason, life is learning in progress. A learned government is a government that embraces continuous learning. Privileged positions are not supposed to form a comfort zone for those without a heart for the public interest. The positions and financial benefits (now or in deferrals) that come with the privilege to govern are not risk free. The obligation is to honour the rights of all people, not only the select few.

Freedom of speech is constitutional and universal. Critical opinions from armchair stakeholders that form an independent governance mechanism will only be dismissed by an autocratic government. As more people are educated and empowered through their rights (as enshrined in the constitution and international human rights law), government actors’ arbitrage opportunities to abuse power and national resources for private interests are depleting.

We hope those in privileged government-linked positions are competent, fit and proper to protect human rights and implement pay for shared prosperity. Any form of excessive pay for a privileged position, at present and in the future, is clear evidence of an imbalance in the workforce, irrespective of gross domestic product growth. The Covid-19 pandemic can be taken as an exogenous factor or enabler for a market correction in relation to pay inequality and disparity only if we take this opportunity.

Now is indeed the best time to forgo for life what is seen as excessive pay. The challenge for the corporate elites from now on is to flatten the pay curve so all excessive amounts can be transferred efficiently to those in greater need.

Dr Marizah Minhat is co-director of the International Centre for Management and Governance Research and Dr Nazam Dzolkarnaini is Associate Professor in Accounting and Finance at Edinburgh Napier University, the UK. Their co-authored academic article on Regulatory arbitrage in relation to international human rights is available as open access. The book, How Much is Hidden: Pay for Elites in Government-linked Entities, is available from the Consumers Association of Penang.

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