Government’s intention to increase the cost of hiring immigrant labors as part of a deliberate policy to reduce the number of foreign workers in the country is misread of the recent launched report entitled “Malaysia Economic Monitor: Immigrant Labour” by World Bank.
It is important to read / study / understand the World Bank’s report carefully under the proper socio-economics context.
This report is important for Sabah as we have the highest number of immigrant labours, 33 percent of the whole country immigrant workforce is concentrated here. Furthermore, immigrant workers represent 35 percent of all workers in Sabah, significantly higher than any other State.
According to the World Bank’s Report, immigrant labour plays a crucial role in Malaysia’s development. Immigrants – both high- and low-skilled – will be needed for the country to achieve high income status by 2020.
The report also said, as Malaysians have become more educated and seek out higher-skilled jobs, and as the labour market remains tight, immigrant labour has filled gaps in low- and mid-skilled jobs, which make up three quarters of all jobs in Malaysia.
The analysis here is matched with Sabah’s socio economics scenario. As we are still a less industrialized state, low skilled immigrant fill workforce gaps, reduce production costs and expand output and exports. As a result, unskilled employment increases and profits rise which increases investment and the demand for higher skilled Malaysians.
The report also found that migrant labour also slightly increases pay for most Malaysians, estimating that a 10 per cent increase in foreign worker numbers bumps wages for locals up by 0.14 per cent, but hurting salaries for existing migrant employees by 3.9 per cent. Malaysians with SPM-level qualifications were those whose salaries increased the most as a result, said the World Bank report when speculating that this may be due to more supervisory and management positions needed to oversee the migrant workforce.
Given this situation, government’s planning to increase the foreign worker’s levy in order to reduce the dependency of foreign workers would not necessary doing good to the economy.
It is misread of the report. The report is not recommending us to reduce the numbers of immigrant labours but it has pointed out that the government must review its current approach to migration, which is disjointed and inefficient at controlling the influx of foreign workers. For example, I always receive the complaint in my own constituency that, long queue in the Tawau Immigration Department, just for the sake of foreign workers application interview of employer by the officer.
The report has pointed out the current approval of immigrant labour does not reflect labour shortages or labour market demands, and the system uses a combination of quotas and levies that are semi-static and uncorrelated with the varying of market conditions.
The quota always can’t match with the market requirement, the planter needs 4 workers but only given 2. It’s nothing more than wasting of time and energy for the employer.
Could higher cost to hire foreign workers solve the problem?