by Professor Dato Dr. Ahmad Ibrahim,
Many countries depend on immigrant labour to support their economy. Such dependence has become an issue in many countries. When Britain decided to exit the EU, one of the contentious issue concerned the rising deployment of foreign labour in the economy. Locals were not comfortable with the influx of foreign labour, mainly from Eastern Europe, taking up low paying jobs in the UK. Many of them worked in hotels, logistics and other jobs which the locals shied away from. But recently, after brexit, it was reported that the UK felt some impact from the absence of immigrant labour. First it was the issue of milk delivery to supermarkets. The milk delivery companies faced shortage of truck drivers. Later, a similar situation rocked the petrol supply chain. There were long queues at gas stations as a result of truck driver shortage. The two incidences clearly showed the important contribution of immigrant labour to the UK economy. We have yet to see the impact on the hotel industry which also employed many workers from Eastern Europe. During the pandemic, the hotel business was badly affected. Now that a recovery of the tourism industry is on the horizon, the shortage of workers may soon be felt.
Here at home, the issues related to foreign labour have also been intensely debated. Many locals detest the presence of immigrant labour in their midst. They argue that their presence has deprived locals of jobs. Some have even taken over the small retail business in the country. In many wet markets, the locals have rented their licences to foreigners. There is no denying the fact that the proportion of foreign labour in Malaysia has been on the rise. According to the Human Resources Ministry, Malaysia currently hosts about 2.1 million documented foreign workers, which accounts for about 14% of the domestic labour force. If we were to take into account the ones undocumented, the number is much higher. The number may even exceed 3 million. But the issue here is that much of our economic activities depend on the low cost foreign labour. Both manufacturing, construction and the plantation business are dependent on immigrant labour. So much so that during the pandemic, because of the restrictions imposed on the import of foreign labour, many such businesses suffered. The palm oil industry alone lost billions in unharvested oil palm fruits because of insufficient workers.
As reported recently, the country’s local workforce is definitely insufficient to support local industries despite the federal government’s ambitious plans to make the nation a fully high-income economy under the New Economic Model. Malaysia faces tremendous shortage of human capital. The presence of foreign labour can be a boon to the economy. A recent 2013 study by the World Bank on the impact of immigrant labour highlights the benefits they have brought to the economy as a whole. However, a careful scrutiny of the report suggests that the positive benefits from immigrant labour were felt largely from outside manufacturing. “In sectors like agriculture and mining, construction and non-domestic services, where unskilled immigrants clearly complemented better skilled native workers by doing tasks that the latter were reluctant to do, returns to both native labour and capital had increased”. Much of the benefits from the immigrant presence accrued to native groups with medium-levels of education and not to those with poor or no education. More importantly, the findings with respect to positive gains in manufacturing were more ambiguous
Though rare, there have been reports of abuses as well in the use of foreign labour. Poor living conditions provided for workers came to light recently as some countries banned the import of products tied to such cases. Many countries pay serious attention to the poor treatment of immigrant labouur. On the flip side, cases of immigrant labour running away from the work they were recruited for have also created problems for employers. It has become clear that it is impractical for countries to be fully rid of foreign labour. What is important is how the process of bringing in such workers is managed. It has to be a win-win formula.
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