Reliance Of The Malaysian Economy On Migrant Workers


In light of the pandemic, more than 4,700 migrant workers, as of July 2020 have reportedly lost their jobs. [2]. To date, 2 million migrant workers are residing in Malaysia. 15% of them are part of the total workforce. A sentence on what we have talked about in the first article — that is they are far removed from our social protection program.

The COVID-19 pandemic and extended Movement Control Order (MCO) have impacted migrant workers both by loss of income and also those who are part of the essential services are at risk of infection daily [3]. While the Ministry of Human Resources (MOHR) has advised business runners that lay-offs are not an option yet termination of foreign employees should be considered also citizen workers should be prioritised [4]. These recommendations are affecting numerous closures of companies leaving more than thousands of workers jobless.

Tan Theng Theng, a research analyst and author of a report on the economic case against marginalising migrant workers at The Head Foundation pointed out that several industries are heavily dependent on migrant workers, including manufacturing, construction, agriculture, forestry, and fishing. That dependence is particularly acute among low-skilled roles, with nearly half of those jobs filled by foreign workers [4].

Because of the suggestion made by the ministry, more than 1,000 undocumented or illegal migrants are in pursuit to seek work with unregistered businesses. Some were arrested in May 2020 during lockdown raids [4].

Over several decades, the Malaysian economic system has always been undergoing a few phases of change, from agricultural to manufacturing and service sectors. This in turn creates a snowball effect that includes labour shortages mainly in the manufacturing industry [1].

The government has no choice but to rely heavily on the influx of foreign workers and it is done by policy implementation in ensuring that foreign workers can migrate to Malaysia legally and obtain a permit to work. While the country has labour shortages, other neighbouring countries such as Indonesia, the Philippines, Thailand, and Myanmar have issues of labour surplus, thus utilising this opportunity for their workers to make a living in Malaysia .

Social response in relation to migrant workers

During the early lockdown, the government has announced that migrants, asylum seekers, and refugees will be provided free testing and COVID-19 treatment while also acknowledging that migrants will not be arrested or forced to provide documentation during the testing process [3].

While this was a great start, it was quickly reversed a few months after with an announcement from the defense ministry that all migrants found in Enhanced Movement Control Order (EMCO) areas across the country will be forcibly placed in detention centres or separate prisons gazetted by the Home Ministry, three buildings which housed hundreds of migrant workers were mass arrested as a result of this quick turn of events [3].

Additionally, the Malaysian Employers Federation (MEF) has raised concerns over straining usage of mandatory COVID-19 swab tests to all migrant workers as the cost of this policy is affecting an already struggling string of businesses [3].

The Social Security Organisation (SOCSO) reported to cover the expenses of COVID-19 screenings, but only to those who have contributed to SOCSO in the first place. Food provisions were provided through welfare departments and civil society organisations (CSO) facilitated by Malaysia Volunteer Corps Department (RELA) or the Malaysian Civil Defence [3].

Threat to job opportunities for locals

According to the World Values Survey in 2018, 55% of respondents in Malaysia reported perceiving that immigration increased unemployment in Malaysia[5]. In another survey conducted by International Labour Organisation (ILO) and UN Women in 2019, 49% of respondents perceived that migrant workers are affecting the national economy negatively [5]. Upon the sky-high unemployment issues since COVID-19, these perceptions have deteriorated into concerns of discrimination and xenophobia

Contrary to popular beliefs, there is zero evidence supporting the perception that migrants are the inherent cause of the gradual unemployment crisis amongst Malaysians. According to World Bank study derived from 1990 to 2010, it suggests that with only a 1% increase in migrant workers, there is only a 0.1% and 0.3% increase in full-time and part-time employment [5]

Provided that migrant workers do not have an equal occupational space as local workers do, job competition is minimal, and migrant workers are essential to the Malaysian economy but often shunned by locals [5].

The need for reform and social safety net for migrant workers

Dr. Muhammed Abdul Khalid, a research fellow at the Institute of Malaysian and International Studies (IKMAS) in Universiti Kebangsaan Malaysia (UKM) has called for policy reform. The pandemic has ultimately highlighted two main issues that need to be solved.

First is the nation’s high reliance on foreign workers, with the percentage of low-skilled foreign workers increasing from 34% in 2010 to 46% in 2019 alone. Additionally, he puts forth the glaring discriminatory treatment that is often overlooked or even normalized [6].

“Social safety nets should be extended to all workers regardless of status. They must be treated with dignity. It is shameful that while the owners collected billions in dividends, the majority of their foreign workers live in cramped and unhygienic dorms,” [6]

Adrian Pereira, Executive Director at the North-South Initiative, conveys that the perseverance and dedication of foreign workers’ hard work typically make them a preferred choice for industries. This only lead to unfair treatment, for instance, undeniably low wages, poor governance, and long work hours (12–16 days)[6].

“What drives a successful transformation of Malaysia’s economy is a foundation of sound labor, industrial and educational policies — and not the removal of migrant workers” — Tan Theng Theng, Public Policy Researcher

Explore our sources:

  1. N.Bachtiar, R.Fahmy and R. Ismail. (2015). The Demand for Foreign Workers in the Manufacturing Sector in Malaysia. Jurnal Ekonomi Malaysia. Link
  2. L. Lee, J. Wong(2020). Malaysia to lift limit on hiring of foreign labour. Thomson Reuters Link
  3. F. Sandanasamy, M. Paavilainen & N. Baruah(2020). COVID-19: Impact on migrant workers and country response in Malaysia. International Labour Organization. Link
  4. R. Latiff (2020). Malaysia seizes hundreds of migrants in latest lockdown raid. Thomson Reuters. Link
  5. R. Khalidi & M. Noor (2017). COVID-19 and the Myth of the ‘Dirty Foreigner’ in Malaysia. Link
  6. S. Surendran (2021). The State of the Nation: Malaysia in foreign worker quandary. The Edge Malaysia. Link

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