High cost of relying on foreign workers

MALAYSIA’S dependence on cheap labour provided by foreign workers is again under close scrutiny. Some are describing it as an unsustainable addiction and asking whether it is time to stop the practice and just employ locals. This would at least ease the unemployment situation in the country.

But those involved in certain industries are arguing that they cannot do without foreign workers. They are mainly from the plantation, construction and manufacturing sectors.

The Covid-19 pandemic may finally be the game changer as it has exposed some worrying health consequences of our dependence on foreign workers.

It has become clear in recent weeks that the spike in Covid-19 cases, especially in states like Selangor, can be attributed to foreign workers. It is not the fault of the workers themselves but the condition of the living quarters provided by their employers. These are said to be mostly overcrowded, creating fertile grounds for the spread of infectious diseases including Covid-19.

In fact, if we look at the clusters that have cropped up recently, most are in overcrowded dwellings such as prisons, detention centres for illegal immigrants and workers’ quarters.

Singapore also had to deal with similar challenges recently, but the authorities there have managed to contain the spread of Covid-19 with their programmes for targeted testing and isolating. It is good to hear that our government is also taking the appropriate regulatory steps to address this issue.

Economists have warned for years that using cheap foreign labour is one of the factors that has prevented Malaysia from escaping the middle income trap. It is also preventing us from embracing the use of technology to reduce reliance on manual labour.

Take the construction sector as an example. The government has for years been promoting the use of IBS (industrialised building system) in construction, but the take-up is very disappointing and many still prefer to hire foreign workers. The negative aspects of that choice are playing out now as Covid-19 continues to ravage our public health system.

The oil palm sector is also heavily dependent on foreign labour, particularly during the harvesting period. With the current restrictions on the movement of labour, especially foreign labour, the industry is losing millions of ringgit in unharvested fruits. The loss is even higher now as the price of palm oil, at more than RM3,000 per tonne, is in an unusually bullish state.

To be fair to the industry, attempts have been made to mechanise the harvesting of the fruits, but it has not been easy to come up with something that can adequately match manual labour.

Hiring locals is also not easy despite the fact that most oil palm plantations have comfortable living quarters and other amenities for workers.

Apart from the public health issue, employment of foreign workers is also not good for the economy. Repatriation of their wages, which has run into billions of ringgit, deprives our economy of consumption spending.

On paper, it would appear that the cost of using foreign workers is low, but looking at the big picture, it may not be.

The Human Resources Ministry will have to think of more creative ways to reduce the country’s dependence on foreign workers.



Academy of Sciences Malaysia

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