Foreign Worker

The story could be about a heartless employer pouring boiling water on an Indonesian maid or labour contractors exploiting a Bangladeshi worker. Or it could be a Minister stating that he received an appeal from the MNCs for the Government to relax its policy on the importation of foreign labour. There just seems to be no shortage of news about this little understood segment of our Malaysian economy.

We should not be surprised at the increasing frequency of snippets of news on foreign labour.

That’s because foreign workers have steadily increased in number over the past two decades so that today they are a key part of the economy. However, for various reasons, the Government and the employers – both small and big – have tended to down play the importance of foreign labour in the country’s development.

Just recently, I was reading again through the Ninth Malaysia Plan. This document is the Government’s blueprint for national development for the period 2006-2010.

There is very little mention or analysis of ‘foreign labour’ in this economic bible of the Government. A quick check of the index shows only two references in a volume of almost 560 pages. One is a statement that foreigners with work permits increased to 1.7 million in 2005, with the manufacturing sector as the largest employer accounting for 31%. (9th Malaysia Plan, p.240)

Given our estimated national workforce was about 10.9 million in that year, this means that officially sanctioned foreign workers accounted for 15% of the total workforce, according to the official statistics.

They come from over 15 countries with the largest number from Indonesia (1.2 million as of 2006). Other sending countries include India, Sri Lanka, Bangladesh, Pakistan, Burma, Thailand, Vietnam, Timor Leste and the Philippines.

But can the official statistics be believed?

Actual number of foreign workers

In fact the foreign component of the Malaysian workforce is a lot larger – in fact, very, very much larger. According to government’s own estimates, there is an equivalent number of unregistered or undocumented migrant labour in the country.

Another estimate was provided by Syed Shahir, president of the MTUC when he spoke at an international meeting on migrant workers. [Speech at MTUC/ILO Follow Up Workshop on Migrant Workers in Malaysia, December, 4-6 2006.]

His estimate is supported by the fact that official entry-exit immigration records in 2004 showed that there were 5,852,997 persons who overstayed after entering the country. This figure – if true today – means that four in every 10 visitors to the country is overstaying, with a very large proportion probably entering the informal labour market.

Hence a realistic estimate of the number of foreign workers in the country would be anywhere between 3.5 and over 7 million. If the higher number is taken into account, it means that a staggering two in every three workers in the country could be a foreign worker.

Policy towards foreign labour

So what should our policy be towards foreign labour? According to the Ninth Malaysia Plan, “the number of foreign workers will be reduced gradually to provide greater employment opportunities to local workers and to reduce administrative costs as well as the outflow of foreign exchange.???

The Plan, however, provides no strategy on how this is to be achieved. All it suggests is that “local labour, particularly graduates, will have to change their mindset so as not to be too choosy in selecting occupations.??? (p.250). In other words, the Government really has no idea on how to reduce the country’s dependence on foreign labour. Hence it has opted for a hands-off policy for fear of disrupting the lifeblood of our economy.

In fact the Government is too optimistic – if not unrealistic – about the future scenario of a hoped-for decline in the number of foreign workers in the country.

Like it or not, all Malaysians will have to accept some simple facts of life in our economy. And one of the key facts is that Malaysia cannot function without the millions of foreign workers that are with us now. The other is that the presence of foreign workers is likely to grow in importance rather than diminish in the foreseeable future.

Malaysia is not the only country where foreign workers have come to play a key role. This is a trend in rich or developed countries all over the world including the US, the EU countries, Japan and the Gulf states. Closer to home, Singapore is a prime example of an economy which is also dependent on foreign labour – in this case including Malaysian labour! In all these countries, prosperous and growing economies have attracted an influx of foreign labour especially for the dirty jobs that the local people shun.

The quicker Malaysians learn to accept that foreign workers are here to stay – in the short term and long run – the easier it will be to come up with a realistic plan on the way forward for our economy and plural society.

Balancing foreign and local workers interests

For any country to fully benefit from foreign labour, there must be several complementary policies. One is to recognize that not all foreign labour is or should be low skilled. This is recognized by some countries which have clear cut policies to attract and retain high skilled foreign labour, including through liberal migration policies.

In our case, it is critical that Malaysian businesses should be allowed to draw on foreign talent from the regional and global pools. This will enable our economy to stay competitive, enable these companies to survive and in the process create more and better jobs for Malaysians.

In some Western countries, foreign students studying in those countries have formed an important part of talent when they stayed back to either become citizens or to work there. Malaysia similarly should take advantage of the large number of foreign students coming to Malaysia to study by providing them with an opportunity to make this country their home. What we should be looking for are skills and commitment for the long term – irrespective of the country of origin.

Whilst seeking a reasonable number of foreign workers to add diversity and dynamism to our workforce and to enable us to reach global markets more effectively, we should not forget the present generation of foreign workers with us now.

If we curtail the use of these lower skilled foreign workers, our manufacturing and plantation industries will lose critical mass and their competitive edge, resulting in the closure or stagnation of many enterprises and the loss of jobs for Malaysians eventually.

The second is the need to re-skill Malaysian for newer jobs as the economy is being transformed. In fact, some adjustment has already taken place amongst Malaysian workers, though not enough. There is no doubt that the inflow of low-cost foreign workers into our construction, agricultural, manufacturing and service industries has acted as an incentive for some Malaysians to upgrade themselves to higher level and better paying jobs as these lower paid jobs get filled up by foreigners.

No study has been done to establish whether the number of Malaysian workers who have been able to upgrade themselves and benefitted from the influx of cheaper labour is larger or smaller than those that have been displaced or marginalized by foreign labour. But the number of Malaysians benefitting is probably not very large.

Whatever the past impact of foreign labour taking over low-cost jobs formerly held by Malaysians, it is necessary that in the future, there should be stronger policies aimed at skill upgrading and retraining of workers. Such retraining and the re-designing of lower end jobs with commensurate wage increases will help Malaysians look more closely at jobs that they may once have avoided and help to lessen our over-dependence on foreign labour.

Importance of educational reform

At the same time, the education system needs to be urgently reformed to ensure a upgrading of the skill sets of our younger generation. This upgrading has to be a continuous exercise to equip the young to take on higher value added, hi-tech and capital intensive work.

Otherwise, we will be burdened with a poorly educated younger generation that may not even be able to compete with foreign labour for the lower end jobs.

In this respect, the recent flip-flop decision on the teaching of Science and Mathematics in English has not helped in charting a clear and consistent policy that can strengthen the ability of our young children to be competitive with the many other countries fighting for better jobs in the globalized market.

Rights of foreign workers

The socio-economic impact and consequences arising from foreign labour can be addressed by greater and more open policy dialogue involving the key stakeholders such as Government, local employers, MNCs, workers, NGOs and independent policy analysts. This would help foster harmonious and equitable working and industrial relations based on economic facts and social justice – a context which is largely missing or in short supply.

Finally, all Malaysians must learn to respect the rights of foreign workers and accord to them the same rights that they demand for themselves.

Mistreatment of foreign workers; exploitation by labour agents and contractors; denial of equal access to benefits and protection guaranteed to Malaysian workers; harassment and persecution by government-sanctioned vigilante organizations such as Rela (there was a notorious ‘Catch a illegal migrant and get paid for it’ campaign which ran in 2005 and 2006 that attracted much international criticism) – these actions are contrary to accepted norms of human decency and have rightly given Malaysians and Malaysia a bad name.