Foreign workers take up more than 20%
of employment in agriculture, construction and manufacturing sectors (Chart 1).
Chart 1
Of late, foreign workers as a
proportion of labour force has trended downward (see Chart 2). Nevertheless,
employment of low wage foreign workers allow employers to keep salaries low. As
long as firms are engaged on a “race to bottom” on labour costs, it allows
employment of cheaper foreign labour vis-a-vis locals. Bank Negara Malaysia
(“BNM”) suggests higher living wages for employees. That’s a noble step. But if
output/productivity is not any higher, deep seated problems remain unchecked.
Chart 2
There must be a conscious effort by
the Government and private sector to move up the chain to a high-income
economy. It is driven by productivity improvements, technological edge and
technical know-how as cited by BNM. The key elements for that to happen would
require some courage:
·
re-introduction of
English as a medium of instruction;
· greater focus on the sciences especially mathematics
and physics;
· an environment of research and innovation
(digitalisation, artificial intelligence, big data etc.);
· a more merit-based system in education, employment and
advancement (in career/business);
· a culture of transparency, accountability and
competency; and
·
willingness to
“benchmark” with other more developed economies
In each of the above areas, there are
several steps that need to be effected and it is only when they come together
that Malaysia can truly be a high-income nation. Otherwise, it remains a slogan
for politicians and policymakers to debate, discourse and defer. Change is
difficult and painful but no progress can be made without them.
Reference: “Low-Skilled Foreign
Workers’ Distortions to the Economy” by Ang Jian Wei, Athreya Murugasu, Chai Yi
Wei, Economics Department, Bank Negara Malaysia, March 2018
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