Foreign Workers - Can't Live Without Them; Can't Live With Them??

There are too many of them and we all have to take the blame for their existence.  They are everywhere; restaurants, petrol stations, construction sites, plantations, security posts, factories, wet markets, farms, you name the sector, they will be there. They come from everywhere; it used to be mainly Indonesia, now they come from Bangladesh, Myanmar, Vietnam, Cambodia, Nepal and India.

The Government, in their attempt to address the problem of illegal foreign workers offered to legalise them via the 6P Programme. Over 2.3 million foreign workers voluntarily registered through the biometric system under the 6P programme after the registration period ended on Aug 31 and over 50,000 of them had decided to return to their countries of origin.

According to a Bernama report on 12 December, Home Minister Hishamuddin said the government is expected to determine the required number of foreign workers according to economic sectors by middle of next month. He said 93,000 illegal foreign workers involved in the legalisation process under the 6P programme were expected to fulfil each sector's requirements.

2.3 million registrations means there were at least 2.3 million illegal foreign workers roaming our streets!

2.3 million registered but only 50,000 decided to go home! The remaining 2,250,000 are still roaming our streets!

2.3 million registered but the government will only place out 93,000 to the sectors requiring them (refer Hishamuddin’s statement as reported by Bernama above). What will happen to the remaining 2.157 million workers?

My question is; do we need them?

Some reports state that Malaysia has 1.8 million legal foreign workers. Add the 2.3 million just legalised, we have around 3.1 million foreign workers. With a labour force of about 12 million, foreign workers represent 25% of all our workers. The 2010/2011 Economic Report states that of the 1.8 million registered migrant workers in Malaysia, 38.2 per cent were employed in the manufacturing sector, 16 per cent in the construction and 14.2 per cent in the plantation sectors.

Indonesians accounted for the highest number of registered foreign workers in Malaysia at 50.9%, which was attributable to their country’s proximity to Malaysia and cultural and language similarities.

Bangladeshis were second highest, accounting for 17%, followed by Nepalese at 9.7%, Myanmars at 7.8%, Indians at 6.3% and Vietnamese at 4.2%.

The latest unemployment statistics put the unemployment rate at 3.3% i.e. almost 400,000. Given this (simplistic) analysis, yes, we need foreign workers.

My next question is; why do we need them?

Human Resources Minister S Subramaniamin an interview admitted that over dependence on foreign labour was the “biggest issue” faced by his ministry but efforts by the government to reduce the numbers have been met with difficulties, including opposition from employers. “Malaysians have become too dependant on foreign workers. The way forward is for the employers to have a change in their mindsets,” said Subramaniam. This mindset change, he said, must translate into employers being less labour dependent and more skill dependent. Subramaniam said many developed countries have gone through this phase and have been able to transform themselves by using less manpower and more machines. He believes Malaysia can change, too. He said the country is caught in a “vicious cycle” where wages are low and locals don’t want to work. “And because locals don’t want to work, foreign workers come in, and the more they come in, the more wages won’t increase,” he said, adding that he hopes wage increases would help alleviate this problem.

Eighty per cent of the workers in the plantations sector is a non-Malaysian, according to the Malaysian Employers' Federation and a drop in foreign worker arrivals could further worsen a labour shortage and lower output growth.

In the construction sector, where two-thirds of the workforce is foreign, a labour crunch could disrupt large government infrastructure projects with a significant multiplier effect.

Many Indonesians also work as domestic helpers. One in every 16 residents in the capital Kuala Lumpur hires an Indonesian helper, according to data from the Indonesian embassy.

Prof Datuk Dr Mohamed Ariff of the Malaysian Institute of Economic Research believes that if Malaysia had not allowed the massive influx of foreign workers, local manufacturers would have been forced to innovate and automate to boost productivity to maintain their competitiveness.

Economists say continuous dependence on cheap foreign labour would not encourage local corporations to mechanise, which is necessary to push the economy to a high-income level as defined by the World Bank.

“Over-reliance on foreign workers can have detrimental consequences, and that is why the government is looking at ways to reduce dependence on them.

“This high dependence cannot be done away with overnight, as a sudden repatriation of foreign workers can have serious repercussions on the economy, especially in sectors like manufacturing, construction and plantation,” Mohamed Ariff was reported as saying.

So, to conclude, we do need foreign workers but at the same time we need a shift in our mindsets to reduce our dependence on them. The main thing to do is to automate our processes. This is however easier said than done. Automation requires large capex and large capex will result in higher costs which lead to higher prices. Another question then arises; are we ready to accept higher prices for our goods and services? Maybe we have to bite the bullet for the sake of our country’s future.

Another thing is to make the 3D (dirty, demeaning and dangerous) sectors more attractive to jobseekers. Yes it sounds ridiculous, how do we make dirty, demeaning and dangerous jobs attractive? Maybe by increasing wages? Increasing the wages of the lower end of the scale will inevitably push the wages of the higher scales up and maybe the goal of a high income economy might be realised. Increasing wages also could negate the effects of higher prices caused by the automation process.

Like Prof Ariff said, the high dependence cannot be done away with overnight so we must start the ball rolling immediately. Incentives must be given to industries to automate and reduce dependency on unskilled foreign labour. Wages must increase to attract workers into previously unattractive sectors. Non-financial benefits must also be increased to further encourage the jobless to apply for jobs in the sectors they previously shunned.

We have acknowledged that the dependence on these workers is not good for the country in the long run. We must do something about it. Now.