Malaysia - Malaysia aims to reduce low-skilled foreign workers

Malaysia aims to slash the number of low-skilled foreign workers in the country by around 10 per cent to 20 per cent over the medium term as it moves towards becoming a high-income economy by 2020.

Reducing the number of low-skilled foreign workers in the country is high on the agenda, as the huge presence of these workers has long been a major drag on Malaysia's productivity growth, according to International Trade and Industry Minister Mustapa Mohamed.

“The reduction of foreign workers in the country, however, has to be done in a gradual manner; it cannot be done too drastically, lest there will be a negative impact on industries that still need to depend on them,” Mustapa said at a briefing after the launch of Malaysia's Productivity Report 2011/2012.

At present, there are an estimated 1.8 million registered migrant workers in the country. Of that, an estimated 700,000 are employed in the manufacturing sector, which is still, to a large extent, stuck in the low-value-added chain.

“We still need to import foreign labour at this juncture,” Mustapa said, pointing out that many companies still faced difficulties in attracting local workers as they tended to shun low-wage jobs.

“We need to ensure that as we cut down our dependence on foreign workers over time, we will be able to find substitution in the local workforce,” Mustapa added.

He expressed hope that when the minimum wage policy was fully implemented, it would help address the problem of local industries attracting Malaysian workers.

The Government had early this month announced a minimum wage of 900 ringgit (US$289) per month for workers in Malaysia and 800 ringgit ($257) per month for those in Sabah, Sarawak and Labuan.

“The implementation of minimum wage provides better quality of life to almost one third of the workforce or over three million private sector economies.

“To the industries, minimum wage can be a strategy to shift from cost-competitiveness to skills and productivity,” he added.

Mustapa stressed the need for Malaysia to modernise its labour market to become a high-income economy.

He said industries needed to create modern jobs that shifted from manual and routine tasks to automation, higher technology and higher value creation, as these were prerequisites to greater productivity and competitiveness as shown by some of the most competitive nations in the world.

It is noted that Malaysia needs to have a per capita income of $15,000 and productivity level of $28,140 to achieve high-income status by 2020.

According to the Productivity Report 2011/2012 compiled by Malaysia Productivity Corp (MPC), Malaysia registered a productivity growth rate of 4.6 per cent in 2011 compared with 5.8 per cent in the preceding year. In terms of productivity level, there had been an increase from 51,407 ringgit ($16,537) in 2010 to 54,023 ringgit ($17,379) in 2011.

To achieve a high-income status, Malaysia would therefore need to register productivity growth rate of 4 per cent to 5 per cent annually from now till the end of the decade.

MPC said Malaysia's economy was expected to sustain its growth momentum in 2012, with productivity growing by more than 4 per cent, driven by the construction and services sectors.

The productivity levels of the construction and services sectors are anticipated to grow by 5.6 per cent and 4.9 per cent, respectively, in 2012, compared with 3.09 per cent and 4.92 per cent last year.

Meanwhile, the productivity of the manufacturing sector is expected to grow at a modest 2.3 per cent compared with 1.97 per cent last year, as the sector remain affected by the spillover effects of the eurozone debt crisis and the unresolved structural problems in the US economy.

Cecilia Kok

The Star

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