By Ravindran Raman Kutty
THIS Sunday is Labour Day. It is the day to celebrate the workers who have contributed immensely to the nation and its people.
The labour force has been growing about 2.7 percent per annum with an expected increase from 12.4 million in 2010 to 14.2 million in 2015. This is due to the rise in the working age population and higher female labour force participation.
However, Malaysia’s efforts in moving towards a high-income economy, higher value-added knowledge and technology-based economic activities, are experiencing a host of deep-rooted challenges in the labour perspective.
The high turnover rate of local workers, difficulties in recruiting/retaining skilled and talented local human capital, and the pressing need to hire foreign workers are some of the setbacks.
Now, there is a bigger problem, the country has grown dependent on foreign labour.
Local SMEs prefer to hire the cheapest labour, in other words foreign workers, stating lower margins and lesser profits as the main reasons. Thus the employment situation is inherently and structurally “foreign-worker” orientated, geared towards low-cost/low-pay. This has contributed to low productivity and redundancies to some extent.
In essence, we are unintentionally creating a third world condition in our own backyard.
Japanese companies in Malaysia concerned over the shortage of labour and knowledge-based skilled workers are planning to relocate operations to other countries such as China. If the situation persists, potentially causing Malaysia’s manufacturing sector’s disappearance from the map within the next five years.
Almost two million unskilled foreign workers have flooded our country, not including an estimated two million more working in the country illegally, primarily in agriculture, construction and manufacturing.
Recent reports indicate that many employers claim that their business activities will come to a standstill if denied foreign-labour employment as the jobs in those fields are perceived as dirty, difficult and demeaning (3D) to the average Malaysian.
Employers have no choice but to utilize foreign labour as they are easy to manage with and do not make demands for wage increases.
Some local employers have even threatened to uproot and relocate should their “low cost” foreign-worker employment be denied. As such, foreign workers fill up the vacuum. Moreover, they are not opposed to working in dirtier, more hazardous conditions and longer hours for equal or lesser pay thereby keeping labour costs relatively low.
Foreign-worker entry has been attributed to an increase in health, social and safety problems. Their huge remittances to their home countries have negatively affected balance of payments.
Furthermore, many will return to their respective countries with their skills. Remittances from Malaysia by legal foreign workers doubled from RM10 billion in 2009 to almost RM20 billion in 2015, the top five countries in 2012 being Bangladesh (RM3 billion), Indonesia (RM3 billion), Nepal (RM2 billion), India (RM625 million) and the Philippines (RM561 million).
However, we must be cautious in the call to halt all importation of foreign workers. The local manufacturing industry and agricultural sector would not be able to cope with the financial costs of hiring local labour.
For Malaysians, the Labour Day serves as a reminder that that we have to address the existing labour issues, i.e. heavy reliance on low-skilled foreign workers, low wage structure, inadequate skilled jobs, low labour productivity, rigidity in labour laws, total lack of labour market information, youth unemployment.
So this Labour Day lets start thinking of ways how the locals could take over from the foreign labour in the long run. We could start by improving labour productivity, creating more skilled jobs, reducing the wage gap and introducing the national wage index. – BERNAMA