South Indian Labour in Malayan Rubber Estates: Profits over People,

Professor Suresh Narayanan, Professor of Economics, and Parthibah S. Gopal, Senior Lecturer in Development Studies, School of Social Sciences, Universiti Sains Malaysia, Penang

In the late 19th and early 20th century, many of the constituent parts of British Malaya had small and scattered populations, insufficient to meet the labour force needs of Malaya’s rapidly growing natural resource–based economy, which was dominated initially by tin and later rubber.

A large number of Indian workers—mainly Tamils from south India—were brought to Malaya through the ports of Singapore and Penang, especially after the government of the Straits Settlements enacted the comprehensive Indian Immigration Ordinance 1884.i  The British authorities considered that Indians were ideal workers because of their industriousness and docility, and most were recruited for hard manual work in European-owned (mainly British) rubber estates. Smaller numbers of Tamils were also recruited for building Malaya’s infrastructure, such as roads, railways, and ports, and for more skilled occupations, such as clerks, technicians, and teachers (Sandhu, 1969).

The local Malay population was primarily engaged in subsistence farming, mainly padi production, and fishing. The Malays showed a disinclination to work in the trying conditions of the estates, although many worked as rubber smallholders. The labour force in the tin-mining industry largely comprised Chinese migrant workers, who like Indian labourers, were mainly indentured until after the first decade of the 20th century. However, Chinese labour was offered as contract workers to European estates by their headmen who negotiated for higher wages that European estate owners were often unwilling to pay. They were also perceived as being unruly and difficult to control (Spencer, 2013). From the British authorities’ perspective, Indian migrant labour also served as a counterbalance to Malaya’s growing numbers of Chinese (Heussler, 1981).

The growth and concentration of the south Indian population in the Malayan states fuelled the growth in exports of commercial agricultural crops, especially rubber. Rubber developed quickly into a major export crop after the growth of the United States automobile industry at the start of the 20th century, with the cultivated area rising from a mere 350 acres in 1877 to 20,000 acres in 1914, and exceeding 2 million acres by 1940, making Malaya the world’s largest producer of natural rubber (Satyanarayana, 2010).

Estate rubber production was organized around highly labour-intensive processes of planting, tapping, and weeding. Relatively cheap labour was readily available from south India, where jobs were scarce, living standards extremely low, and famines periodic (Sultan Nazrin Shah, 2019). The seemingly unlimited labour supply well served Malaya’s demands and kept labour costs low.

This article examines how wage levels were determined in the rubber estate sector and spotlights the exploitation of Indian labourers by many estate owners and recruitment agents. While the British colonial government enacted legislative measures to improve the basic working conditions of rubber estate workers, it tended mainly to regulate to further the interests of estate owners. Profits were maximized, particularly during the rubber boom of the early decades of the 20th century, by suppressing wages at the expense of workers' welfare.

Recruiting labour for the estate sector

Labour recruitment relied on two mechanisms—the indenture and kangani systems. Though the former preceded the latter, both were in operation simultaneously for much of the 19th and early 20th centuries (Satyanarayana, 2010).

Under the indenture system, labour recruitment firms based at the ports of Madras and Nagapatnam in south India recruited workers directly. People from the poorest and most depressed classes were lured with a mix of facts and false promises. Recruitment agents loaned them money to make the voyage to Malaya and the labourer entered into a contract to work for a fixed period. When the period of indenture was over, they could return home if their debts had been repaid, or else be indentured again. In reality, many labourers could not accumulate enough savings either to repay the original debt or to pay for their passage home and remained debt-bound as indentured workers. Workers were directly under the estate’s management and could not change employers or seek alternative employment during the period of indenture (Halim, 1988).

Indian labourers working in a Malayan rubber estate under the watch of a Kangani
National Archives of Malaysia, Accession No. 2001/0041526W

Abuses were widespread, and as early as the mid-1860s leaders of India’s independence movement pressed for a ban on the indenture system. Local planters, however, violated the ban and lobbied for lifting it. As a compromise, the Straits government promised to oversee implementation, in return for the Indian government’s assurance that the indenture system would be allowed to continue. In 1896, an official commission, moved by the abuse of the system and the poor conditions on the estates, recommended that it be replaced by free labour emigration.

The indenture system eventually collapsed, but only because it proved to be a liability to employers. Under the system, a wage was paid for a predetermined task, regardless of output. During periods of high prices, this allowed employers to increase the number of tasks at the fixed (low) wage rate per task.ii  But when prolonged periods of low rubber prices emerged (1910–1917), employers had to employ at a fixed rate. Repatriation of workers was not an option owing to the contractually agreed period (usually three years), and the fear of not getting adequate labour should prices recover (Halim, 1988). Also, when innovations allowed alternate-day tapping, employers were pushed to seek another system that might serve them better. The indenture system was officially abolished in 1910, but its use persisted till 1914.

The kangani system that ultimately replaced it proved to be no better for labour. Estates outsourced the job of labour recruitment to middlemen (the kangani) who recruited labour from their village or district in India. The monetary inducements offered by estates to kanganis tempted some of them to recruit labour ‘unlawfully and through fraudulent means’. They ‘indulged in coercion... [k]idnapping minors and catching recruits at the weekly shanties, seducing young men with the promise of getting them married in the colony (Malaya)… [and] misrepresenting the nature of work and the rates of wages on the estates…’ (cited in Satyanarayana, 2010, p. 17).

Under the kangani system, the worker no longer had an employment contract with the employer. Instead, employers dealt with the kangani who, in turn, controlled the workers he recruited. The kangani authorized himself to punish labourers and implement methods of social control—ranging from paternalism to brutal arbitrariness (Satyanarayana, 2010). Employers fully embraced the system, ignoring its abuses and irregularities, because the kangani assumed responsibility for the workers (Halim, 1988).

A colonial plantation manager with a kangani and an Indian rubber tapper on a Malayan rubber estate early 20th century
Aliran online, 2020

Wage determination in the estate sector during the indenture system

Because labour was sourced from villages in south India, the wage rate in the Malayan estate sector operated independently of the interaction of Malaya’s labour supply and demand conditions. The base wage rate was determined by labour market forces in the south Indian village economy.

In the village economy, a large labour supply coupled with poor labour demand produced a market-clearing wage rate well below the subsistence wage level. As starving or malnourished workers cannot contribute to profits, a combination of the self-interest of employers and state humanitarian concerns kept the village wage rate high enough to meet subsistence needs. Because this wage rate was above the (low) market-clearing level, it created a pool of surplus labour in the villages available for recruitment to Malayan estates.

Initially, the wage rate paid to Indian workers under the indenture system was determined by the government through a Straits Settlements comprehensive Indian Immigration Ordinance 1884. The wage rate was arrived at by estimating the costs of necessities (itemized under the headings of provisions, clothes, and miscellaneous) and adding a small margin to cover the cost of living. This wage was set just above the wage prevailing in the village economy to ensure an uninterrupted supply of labour. Males aged 21 or above were to be paid 12 Straits cents a day for the first year of indenture, and 14 Straits cents a day for the subsequent period. For females (and males below 21 years) the rates were 8 Straits cents a day for the first year and 10 Straits cents for the remaining period.iii

However, the higher rates were payable only after a worker had repaid the cost involved in the journey from south India to Malaya. Employers were also obliged to supply workers with food and groceries at ‘wholesale prices’ (Arasaratnam, 1970). While the unorganized workers had no means to ensure that these stipulations were adhered to, by 1906 the employers had formed a Planters’ Association of Malaya to protect their interests. Working with the London-based Rubber Growers’ Association (RGA), formed in 1907, they were a formidable force.

If the increase in the Malayan estate wage rate was to come from India, it had to be induced through a large decrease in labour supply in the south Indian village economy or a big increase in labour demand in the villages. Neither of these occurred to make an impact on Malaya’s estate wage rates. Instead, high birth rates, droughts, and joblessness ensured that the supply of labour to Malaya was abundant and uninterrupted.

The government-prescribed rates (under the indentured labour system) were premised on the need to foster Malaya’s British plantation export-led economy. This was evident during the phase when the indentured labour system and the kangani recruitment system operated side by side. The wage rates paid to indenture labour, fixed by law, were lower. For example, in 1904, a male indentured worker in Perak on task work received 38 Straits cents a day, against 50 Straits cents a day for a non-indentured worker. Similarly, the monthly pay of an indentured estate labourer was Straits$7.68 compared with the Straits$10.00 earned by a non-indentured worker (Parmer, 1960, p. 172).

Wage control through regulating immigration under the kangani system

The introduction of the kangani system created the need for a new mechanism to prevent wages from rising. The Indian Immigration Committee (IIC), formed in 1907, was tasked with devising one. It did so by varying migrant labour flows.

The IIC comprised government officials and European planters, and was chaired by the Superintendent of Immigration. Over time, nominees of the Planters’ Association of Malaya and two representatives of the government of India were added (Parmer, 1960).

The simplest measure devised to keep wages low was through the increased issuance of kangani licences in times of high labour demand. Later, government subsidies were provided to lower the fares of workers brought to Malaya. Within the country, wage rates were prevented from tending to some level of uniformity by imperfections in the labour market and significant barriers to mobility created by employers. Although the law allowed a worker to seek employment with another employer on the completion of his or her service, employers designed schemes to limit labour mobility. The late payment of wages and the refusal to issue ‘discharge tickets’ on petty grounds were common tactics. The government considered it ‘impractical’ to prevent such practices (Parmer, 1960, p. 173).

During this period, when there was no direct intervention of the government of India in the wage-fixing mechanism, there was only one instance when planters proposed raising wages for workers. Anticipating a significant rise in rubber prices at the end of World War I in 1918, and anxious to secure adequate supplies of labour to meet this boom, employers put forward proposals to raise wages and improve workers’ living standards. These were quietly dropped, however, when the anticipated post-war boom failed to materialize.

Formal wage-fixing again

The retreat by employers, after arguing for a wage increase, provided the Indian government with an opening to get involved in wage-fixing again. Under the Indian Emigration Act of 1922, which was negotiated between the Indian and Malayan governments, the need for a basic standard wage for Indian workers (fixed by law) was incorporated. However, the Malayan government was tasked to determine the basic rate.

The Malayan government, in turn, passed the task of periodically fixing or revising the basic wage rate to the IIC through provisions in the Labour Code of 1923. While all interested parties, including the government, could make representations at these wage-setting inquiries, the lone voice for workers in the wage-fixing inquiries was the Agent of the Government of India. This formal machinery to determine wages ended in 1938, when the Indian government banned all assisted migration to Malaya.

The IIC focused on determining an ‘appropriate wage’, and both the Malayan and Indian governments agreed on a standard wage that was to be the minimum. In most cases, employers paid this minimum—or less. In determining this minimum wage, IIC discussions again centred mainly on the cost-of-living component of the wage, ignoring other factors like labour productivity and the employer's ability to pay. Once, in response to a suggestion by the Agent of the Government of India that the industry share its prosperity with workers, the Controller of Labour (as Chairman) laid down the principle that ‘wages in the past had been determined mainly by custom and other considerations and not by the industry’s ability to pay’ (Parmer, 1960, p. 193).

Yet the ability to pay became a central concern in arguments for reducing wages during the economic depression of the 1930s—a period when many Indian estate workers were repatriated. That the ‘industry could not afford it’ was a familiar refrain. Other fanciful claims were also made. One was that if wages rose too high, Indian workers would become uneconomic and would be substituted with Chinese workers (Parmer, 1960, p. 183). Another was that Indians would work less and become lazy if they were paid more as they were essentially a satisfied lot and were better off here than in India (Parmer, 1960, p. 183). The IIC-prescribed rates always gave priority to the profitability of estate operations rather than the welfare of labour (Spencer, 2013).

Between 1924 and 1930, the IIC carried out several wage inquiries to set wage rates for men and women in important rubber-growing Malayan districts (Table 1). Males were paid higher rates than females for identical tasks, with no justification.

Table 1 IIC wage inquiries, 1924–1930

Source of data: Parmer, 1960, pp. 181–182.

The Malayan government also adopted the suggestion of its Indian counterpart to implement the principle of compensating differentials—dividing estates into those located in favourable and unfavourable key areas. Areas not covered by these two categories (non-key areas) were left alone. The key areas of Province Wellesley, Kuala Selangor, and Klang were considered favourable on account of their good location or better working environment; the legislated wage rates were lower. In contrast, the less favourable key areas covered districts in Pahang and Ulu Kelantan; higher wage rates were prescribed to offset their remote location and more hostile working environment.

The last wage inquiry, held on 16 and 31 July 1930, was initiated to reduce wages in the face of declining rubber prices in both key and non-key areas. The issue of ‘ability to pay’, which was dismissed in arguments to raise wages during periods of prosperity, was successfully invoked to cut wage rates. Departing from convention, the British High Commissioner, Cecil Clementi, was pressured by planters and company representatives to initiate it. Additionally, the inquiry sought to set one standard wage for all key areas.

In the 1930s, estates were required to set aside one-sixteenth of an acre to encourage workers to cultivate food crops and raise cattle to buttress their meagre earnings and to provide employment for members of the family (Arasaratnam, 1970).

The economic depression of the 1930s eroded whatever little gain the workers may have made over the years. As the impact of the depression took its toll on the economy between 1934 and 1941, it was a battle to ensure that employers paid the prescribed wage rates. In July 1931, employers were implicitly allowed to determine their worker's wage rates, which led to widespread abuse. The wage rates for males fell from 40 Straits cents in 1931 to 25–30 Straits cents in late 1931, to 20–25 Straits cents in mid-1932, and to 25–28 Straits cents by end-1932 (cited in Ramasamy, 1994, p. 36).

When prices eventually recovered, there was pressure from the Indian government and the Federated Malay States Labour Department to raise workers' wages. The Indian government lent its weight by refusing to permit new labour recruitment without an increase in wage rates. In 1936, employers reluctantly agreed to pay a standard rate of 40 Straits cents for men and 32 Straits cents for women in all regions—rates still below those prevailing in 1928. A committee of one-man alone—Srinivasa Sastri—was sent from India to report on the conditions of Indian estate workers. His report, completed in 1936, recommended that wage rates be restored to the 1928 levels of 50 Straits cents for males and 40 Straits cents for females in all areas. These rates held till the Japanese Occupation of 1941 (Arasaratnam, 1970, p. 61).

Wage disparities in the estate sector

By the early part of the 20th century, the estate workforce was majority Indian. In 1918, estates in Malaya employed 368,564 workers comprising Indians (57 per cent), Chinese (27.5 per cent), Malays (8.5 per cent), Javanese (5.8 per cent), and others (1.2 per cent) (Gilman, 1923, p. 25). More generally, Indians accounted for 66–80 per cent of the estate workforce between 1907 and 1939, and remained the dominant group after that (Parmer, 1960, p. 273).

Ethnic wage differences among estate workers were prevalent. One claim was that Chinese wage rates were higher because they were demanded for other forms of employment where Indians and Javanese were deemed unsuitable (Gilman, 1923, p.26). More credibly, the Chinese were contract workers paid piece rates, negotiated by their headmen while Indians were paid the daily wage rates determined, at various times, by the colonial authorities or their employers.

In around 1923, Chinese estate labourers were paid between Straits$15 and Straits$18 per month. In the Federated Malay States, Indian wage rates were 40 Straits cents a day for men and 30 Straits cents for women; similar rates prevailed for the Javanese (and others).iv  In the coastal districts of Selangor, Indians were paid even lower rates: 27–35 Straits cents a day for men and 22–30 Straits cents a day for women (Gilman, 1923, p. 26). It was estimated that Chinese tappers earned on average 50–100 per cent more per day than their Indian counterparts in 1925–1940 (Arasaratnam, 1970, pp. 61–62).

Estate living conditions till the 1940s

Improvements in estate life came by way of various labour codes, rather than wage rate increases. The codes were enforced by the Labour Department, which was formed in 1911 out of the earlier IIC. The Department became a pan-Malayan authority by 1925. Officials regularly inspected rubber estates to ensure compliance with regulations on housing, water supply, and medical and sanitary conditions, which helped check serious abuses by estate managers.

The Federated Malay States Labour Code of 1912 mandated that accommodation be provided for workers. It was fulfilled by the provision of straight, narrow structures—'lines’—divided into cubicles and placed in the central section of the estate. Each cubicle was divided into several small rooms with each housing a family. Though ostensibly ‘free’, the rent was deducted from workers’ wages. The cubicles afforded very little privacy, were often overcrowded, and created an unhygienic environment where disease outbreaks were common (Arokiam and Sundara Raja, 2019). An excerpt from the British newspaper, The Observer, read as follows: “Several times I have been shown with pride coolie lines on plantations that a kennelman in England would not tolerate for his hounds” (cited in Spencer, 2013, p.39).

The Federated Malay States Labour Code of 1923 provided for schools and nurseries; a basic primary education in Tamil was offered, often in makeshift settings like huts and sheds, and taught by clerks and part-timers with no teaching experiences. This foot dragging by estate employers reflected their stand that education was a state responsibility. Moreover, as estates offered employment to children aged 10 to 12, and school attendance was not compulsory, there was no incentive to send children to school (Arokiam and Sundara Raja, 2019). The education policy on colonial owned plantations was to insure that the children of plantation labourers remained as plantation labourers (cited in Spencer, 2013, p. 11).

Only in the 1930s were trained teachers made available in Tamil schools, and the state governments took over organizational and administrative control. In 1932, vernacular schools were given grants based on the number of students, attendance, and student examination achievement. In addition, employers supported these schools by donating funds from the sales of toddy (palm wine) consumed by Tamil workers.

The effectiveness of the government mandates depended on enforcement, which was often lax, and improved conditions were only apparent after 1935. Houses made up of four rooms per unit and occupied by two families were built after that date, with separate entrances and offering greater privacy. Hospitalization, medical facilities, and rudimentary school facilities were also provided, although these were mostly on larger estates. Estate labourers and their dependants were entitled to free hospital treatment for up to 30 days a year (Arasaratnam, 1970).

By 1941, on the eve of the Japanese invasion of Malaya, improved standards of sanitation, health, and hygiene were evident, but less progress was made with respect to hospital facilities (Arasaratnam, 1970). These improvements gathered momentum with the inflow of unassisted migrants after World War II. In fact, by the late 1930s, 91 per cent of Indian workers in Malaya were unassisted migrants, up from a mere 12 per cent in 1920 (Kaur, 2014, p. 197). The kangani system was rendered obsolete, and officially scrapped in 1955.

The growing size of free wage labour, coupled with rising anti-colonial sentiment and fluctuating economic conditions, emboldened Indian estate workers to engage, for the first time, in a wave of strikes in 1941. Their demands provide an insight into the extent of gains made till then. The workers wanted pay parity with Chinese estate workers, the provision of ‘proper’ education for their children, and better medical facilities. They also called for the closing of toddy shops on estates, and an end to abuse by non-European staff and to molestation of their women by European and non-European staff (Tully, 2011, p. 276).


Putting profits before people, estate owners—with the tacit support of the British colonial authorities—devised various mechanisms to keep Indian estate workers’ wages low and unresponsive to increases in labour demand. While this helped ensure the growth of the Malayan economy and the prosperity of owners and managers of the estates, little of the gain was shared with Indian workers, as is evident from the fact that between 1884 and 1941 the ‘standard’ daily wage (in key districts/areas) rose from 12 to 40 Straits cents for males and from 8 to 32 Straits cents for females—an increase of just 28 Straits cents for males and 24 Straits cents for females over 57 years.

In other words, the yearly increase was less than half a Straits cent—0.49 for men and 0.42 for women (Gopal, 2006). These payments were also very low compared with what Chinese estate workers received for similar tasks. This arrangement prevailed only because of the miserable conditions in south India, and the ravages wrecked by natural calamities that made the worst-hit lowest classes willing to endure extreme hardships in Malaya while hoping for a better future (Stenson, 1980).

Rising political consciousness in India forced the British authorities there to pressure their Malayan counterparts to improve the lot of estate workers. While not much was achieved by way of wage rate increases, concessions to improve life on estates were gradually made by employers, albeit reluctantly, supported by government labour codes. Estate owners were forced to abide by laws that allowed for the inspection of the health, housing, payment, and discipline of Indian workers, and occasionally to suffer prosecution, or even closure of their estates (Hagan and Wells, 2005).

Further reading:

Amrith, S. S. 2010. ‘Indians Overseas? Governing Tamil Migration to Malaya, 1870–1941’. Past & Present, 208, pp. 231–261.

Arasaratnam, S. 1970. Indians in Malaysia and Singapore. London: Institue of Race Relations.

Arokiam, S., and Sundara Raja, S. 2019. ‘Path Dependent Development of Indian Plantation Labourers in Malaysia: Unfolding the Historical Events in Understanding their Socioeconomic Problems’. Institutions and Economies, 11(4), pp. 79–102.

Gilman, E. W. F. 1923. Labour in British Malaya. Singapore: Fraser & Neave.

Gopal, P.S. 2006. ‘The Earnings Determination Mechanism with Respect to Rubber Tappers in Peninsular Malaysia in the Pre- and Post-Union Eras’. Master of Social Sciences [Economics] Thesis, Universiti Sains Malaysia.

Hagan, J. and Wells, A. 2005. The British and Rubber in Malaya, c1890–1940. University of Wollongong.

Halim, S. 1988. Exploitation and Control of Labour within the Malayan Rubber Industry till 1941. Kajian Malaysia, 6(1), pp. 1–43.

Heussler, R. 1981. British Rule in Malaya: The Malayan Civil Service and its Predecessors, 1867–1942. Westport: Greenwood Press.

Kaur, A. 2014. ‘Plantation Systems, Labour Regimes and the State in Malaysia, 1900–2012’. Journal of Agrarian Change, 14(2), pp. 190–213.

Parmer, J. N. 1960. Colonial Policy and Administration: A History of the Rubber Plantation Industry in Malaya, 1910–1941. New York: J. J. Augustine.

Ramasamy, P. 1994. Plantation Labour, Unions, Capital, and the State in Peninsular Malaysia. Kuala Lumpur: Oxford University Press.

Sandhu, K. S. 1969. Indians in Malaya: Immigration and Settlement 1786–1957. Cambridge: Cambridge University Press.

Satyanarayana, A. 2010. “Birds of Passage”: Migration of South Indian Laborers to Southeast Asia’. Critical Asian Studies, March 01(1), pp. 89–115.

Spencer, P. A. 2013. ‘Malaya's Indian Tamil Labor Diaspora: Colonial Subversion of their Quest for Agency and Modernity (1945–1948)’. Master of Arts Thesis, Utah State University.

Stenson, M. R. 1980. Class, Race, and Colonialism in West Malaysia: The Indian Case. St. Lucia, Australia: University of Queensland Press.

Sultan Nazrin Shah. 2019. Striving for Inclusive Development: From Pangkor to a Modern Malaysian State. Kuala Lumpur: Oxford University Press.

Tully, J. 2011. The Devil’s Milk: A Social History of Rubber. New York: Monthly Review Press.

I  As early as 1786, Indian labourers were brought to the Settlement of Penang by the British East India Company to work on the construction of roads, drains, and other public infrastructure (Sandhu, 1969).
ii Often expressed in terms of completed tasks rather than hours worked (Arokiam and Sundara Raja, 2019).
iii The prevailing currency was the Straits$, with 100 cents to the dollar.
iv In contrast, an Indian male earned Straits$8.80 per month, and an Indian female earned Straits$6.60 in the Federated Malay States, based on a standard 22-day working month.


c/o Asia-Europe Institute
University of Malaya,
50603 Kuala Lumpur

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