Last Updated 07 Apr 2020

Issues of Foreign Workers Policy in Malaysia Manufacturing Industry

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Introduction On March 7, 2011 The Star, we know that our Malaysia government had decided to recruit more foreign workers from India which around 45,000 people from India. This is to meet the demand by around 13 sectors which currently in shortage of workforce. So, this resulted in many people and The Malaysian Trades Union Congress (MTUC) had strongly opposed the decisions made by government. The Malaysian Trade Union Congress (MTUC) is said as the most representative workers’ organization in Malaysia.

Three main objectives emphasized by MTUC: first is to promote the interest of its affiliate unions in order to improve the workers’ economic and social conditions. Second is to ensure the policies are developed and action been taken towards make sure that full employment and setting a minimum wage, a legal maximum working period per week which is 44 hours and served as a training centres for workers. Thirdly, build a Social Security measures that provide retirements benefits, as well as protection against sickness, unemployment, injury, and old age.

Overall, MTUC was served to protecting the workers interest or fight for them. According to Nagiah Ramasamy (2008), our Malaysia trade union movement is facing many challenges, which are from neoliberal policies and the changing structures of employment. Due to the strict requirements of the Trade Union Act 1959, Malaysia union are normally small fragmented and regional. But, they still protest the decision of recruiting more foreign workers from India which might harm our local workers benefit.

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Some local workers are too picky on job selection and they don’t want to work unless there is high salary, benefit or bonus waiting for them. So, attitude towards the job is their main problem. So, the employers forced to retrenched the local workers and recruiting the foreign workers by outsourcing or others way. The objectives of this assignment are to figure out the problems facing by Trade Unions in Malaysia on migrant and domestic workers. Furthermore, we also know that the impacts of the foreign workers policy in manufacturing industry.

In this assignment, we have a more understanding on foreign workers policy as well as the ways to overcome it in future trend. Literature Review According to A. Navamukundan (n. d. ), employers are cost-conscious and choose workers who are not only inexpensive but also have the necessary skills and comply with strict discipline and hard work. The preference will be for immigrant foreign workers, who will accept both lower wages and worse terms and conditions of employment, as their primary objective is to earn as much money as possible within a short p of time.

Those are the reason why the population of immigrant foreign workers are increasing years by years. A study done by Philip S. Robertson Jr (n. d) stated that the Malaysian Government does not have a comprehensive legal and policy framework to regulate the recruitment, admission, placement, treatment, and repatriation of migrant workers. Oversight of migrant workers is divided among ministries, and even within ministries, between various departments. Therefore, foreign worker can easily migrate to our country to find a job which offers them the salary that is higher than their own countries.

This has become a threat to the local workers. Nagiah Ramasamy (n. d) proposed that the challenge for union leaders is to build a union movement that can respond effectively to the threats and opportunities that it faces with the growing influence of MNCs and the growing numbers of bilateral trade agreements. Trade unions can help in improving occupational health and safety, decent work and social dialogue with government and employers. It is so obvious that trade union play an important role in fighting for local worker’s right. A study presented by U. S.

Department of Labor stated the Government of Malaysia revised its policy on foreign workers so that priority would be given to Malaysians seeking employment due to the world economic slowdown and increased unemployment in 2001. The Government has limited documented workers to a three year stay and is cracking down on unregistered foreign workers, with new amendments to the Immigration Act calling for harsh penalties. According to Kgaogelo Elizabeth Mokoka (2007), most South African nurses immigrate to destinations such as UK, Saudi Arabia, New Zealand, Australia and the USA (Xaba & Phillips 2001).

In a study commissioned by the World Health Organisation (WHO), Buchan et al (2003) identified two groups of countries in terms of nurse emigration and mobility. “Destination countries” are those to which nurse are drawn, while “source countries” are those that nurse are drawn from. Destination countries include five countries, namely Australia, Ireland, Norway, the UK and the USA. According to Mr. Ajit Singh Jessy from the Penang Human Resources committee, salary remains as one of, or the most, important factor in the retention of workers.

As such, the complaints of local workers regarding wage levels are not baseless, especially when it comes to menial forms of labour. What may be baseless is the argument that locals shun these jobs which then have to be farmed out to foreign labourers. According to Cecilia Kok (2011), for South and Southeast Asian economies, especially those that are lagging behind Malaysia, many migrant workers perceive a land flowing with milk and honey. Official data show that Malaysia attracts a huge number of migrant workers into the country.

According to official record, the number quadrupled from less than 500,000 in 1999 to more than two million, representing about 17% of the country's workforce in 2008. Vijayakumari Kanapathy (2006) proposed that foreign workers in large numbers were seen as a security threat as the rising crime rate and incidence of highly contagious diseases were associated with them. Such popular perception was compounded by the belief among policy makers that heavy reliance on low-skilled foreign labour will trap the economy in low-wage low-skill equilibrium and slow down the much-warranted economic transformation into high-skilled activities.

According to the International Organization for Migration (n. d. ), there are approximately 2,109,954 migrant workers currently working in Malaysia, 50 per cent are Indonesian labour migrants, indicating the scale of Indonesian labour migration to Malaysia. The majority of labour migrants arriving in Malaysia originate from other South and Southeast Asian countries, mainly attracted by the higher salaries that are covered in Malaysia compared with their countries of origin.

A study done by FEDERATION OF MALAYSIAN MANUFACTURERS (2010) stated that Manufacturing companies are currently reporting an increase in orders. However, many are facing difficulties accepting and fulfilling orders due to a shortage of workers. Some have to turn away orders while others are penalised for late delivery. There are also companies recording losses because they have not been able to fulfill orders. Development of the Issues Important of Manufacturing Industry and Contribution to GDP The Gross Domestic Product (GDP) of Malaysia is depends on its agricultural ector, manufacturing industries and the service sectors. Purchasing power parity (PPP) is a theory which states that exchange rates between currencies are in equilibrium when their purchasing power is the same in each of the two countries. This means that the exchange rate between two countries should equal the ratio of the two countries' price level of a fixed basket of goods and services. In 2008, the agricultural sector had contributed 9. 7 % towards the country’s GDP. The contributions of the manufacturing industries were estimated as 44. % and that of service sector was 45. 7 % towards the country’s GDP. As per the GDP- PPP, Malaysia is ranked 29th in the world. A GDP growth rate of 20 % was noticed towards the end of 20th century. The Gross Domestic Product nominal of Malaysia in 2009 was estimated as US$ 207,400 billion in 2009 and that of GDP-PPP was estimated as $ 3. 9 billion. The GDP nominal per capita in 2009 was estimated at US $8,100. Analysis of challenges facing by Trade Union in Malaysia Number of foreign workers is growing-1. 6 million in 2005 to 1. million in 2010 (figure 1). According to Philip S. Robertson Jr. , Malaysians have a bad altitude of not willing to perform jobs that they consider as 3-D (dirty, difficult and dangerous), creating demand for foreign workers in sectors like plantations/agriculture, construction, manufacturing, and some service occupations. The Malaysian Trades Union Congress said today it opposes strongly the proposed mass recruitment of 45,000 foreign workers because it would edge out locals from the labour market. According to MTUC vice-president A.

Balasubramaniam, a profound effect on the wages of Malaysians could be caused by such a big influx of foreigners and the government’s high-income policy for them would be jeopardized too. Moreover, locals are being deprived or discriminated if they are competing with foreign worker for the opportunity of being chosen to work overtime according to Ministry of Human Resources Malaysia. A study done by Syarisa Yanti Abubakar, from the short-term point of view of employers, migrant labour will only be hired only if doing so is more cost effective compared to other existing alternatives.

That’s why locals are left behind because their cost of hiring is far higher than that of foreign worker. Besides that, according to Ministry of Human Resources Malaysia, more and more local workers are retrenched and replaced with foreign workers. This is resulted by the actions taken by many manufacturing companies of outsourcing foreign workers through some agencies. Furthermore, altitude is another reason which cause the retrenchment of local workers such as thinking too highly on themselves, not willing to do those ‘non-air conditioned’ job and so on.

STATISTICS OF FOREIGN WORKER IN MALAYSIA Statistics PLKS by Citizenship and Sector, Feb 2010 (Source: Immigration Department) STATISTICS OF FOREIGN WORKER IN MALAYSIA Statistics PLKS by Citizenship and Sector, Feb 2010 (Source: Immigration Department) Figure 1 Implementation Various foreign worker policies are implemented by the to control the influx of illegal foreign workers. According to economic report 2004/2005, these include the Foreign Worker Rationalisation Programme to legalise illegal workers, amendments to the Immigration Act, 1977 and imposition of an annual levy.

In addition, several Memorandum of Understanding (MOUs) were signed with labour exporting countries to authorise legal recruitment of foreign workers. All of these had resulted the employer’s preference more towards foreign workers but not the locals and this preference has come along with three obvious activities according to a study done by the Ministry of Human Resources Malaysia. The first is the number of the application on recruiting foreign workers is significantly increasing as we can know from a statistic that there are average 20,000 foreign workers approved every month in Malaysia.

Secondly, most of the employers are not taking serious altitude in recruiting locals. Those applications from the employer mostly from manufacturing industry are bypassed while going through the ELX system to ensure the objective of recruiting foreign workers can be achieved. Lastly, large portion of foreign workers in Malaysia are employed through the outsourcing companies to escape the quota limit. If the employer directly hires foreign workers from source countries, they will be facing the quota limitation and therefore they hire the foreign workers through a third arty. Advantages According to Daniel Lee and Richard Ho (2011 Nov), many employers complain that their business activities will come to a dead stop if they forbid them to use foreign workers because the jobs in those sectors are perceived to be dirty, difficult and demeaning to the average Malaysian. Therefore, they have to utilize foreign workers and sing praises of hiring such workers, supposedly of a labor category that is easy to utilize, simple to manage and that does not make demands for wages increases.

Some local employers have voiced out in support for the hiring of foreign workers that many among them have threatened to blot out and relocate if their demands for “low-cost” foreign workers are unmet. As such, foreign workers fill up the empty space as they are not opposed to working in dirtier, more dicey conditions and longer hours for equal or lesser pay thereby keeping labor costs relatively low and helping to keep Malaysia competitive against other low-cost producing countries. They also serve as a buffer during times of recession as they help sustain.

Disadvantages According to Ken CK (2002), the economic profit that gained from foreign workers has resulted in social costs and social problems, for example rising crimes, fraud, social deviance, health care costs and the transmission of communicable diseases including HIV/AIDS. This is because their unsafe sexual behavior through commercial sex, and casual homosexual and heterosexual activities. Furthermore, according to Syarisa Yanti Abubakar (2002), migrant labours will only be hired only if doing so is more cost effective compared to other existing alternatives.

This will cause the locals are being deprived or discriminated if they are competing with foreign worker for the opportunity of being chosen to work overtime according to Ministry of Human Resources Malaysia. According to Ministry of Human Resources Malaysia, nowadays local workers are retrenched and replaced with foreign workers and this will resulted by the actions taken by many manufacturing companies of outsourcing foreign workers through some agencies.

Altitude is also another reason which causes the retrenchment of local workers because they think too highly on themselves and not willing to do those 3D jobs (dirty, difficult and dangerous). Effects of Foreign Worker Migration to Manufacturing Industry According to Ministry of Human Resources Malaysia, there must be no discrimination in treatment by employer on local and foreign workers in respect of wages and terms and conditions of service. According to K George, the government has finally decided to extend equal treatment to foreign workers and also Human Resources Minister Dr.

Fong Chan Onn announced that foreign workers employed in Malaysia would be treated equally in accordance with the provisions of the International Labour Organisation (ILO) convention which Its function is to safeguard the rights and dignity of the working people all over the world. Recommendation Foreign worker indeed have contributed to the growth of economy, but too dependent on this group of foreign workers to drive our economy cannot be carry out in long term as this may drag our country economy.

To stop dependence of foreign worker in our country cannot be done away overnight as a sudden repatriation of them can have a serious impact on the economy. Therefore a careful planning and cooperation from employer and government is needed. One of the ways to ensure employers lower down the foreign worker and shift to employ locals are by quotas system. Quotas of foreign employee can hired in one company should be set by the government to stop them over relying to foreign worker and hire more local.

Different quotas should be set differently according to the supply and demand because the supply for local labour in certain industry is low for example construction. Quotas should be raise for a certain period of time to minimize the impact to the industries. Government can reduce the amount of foreign worker by increasing levy on foreign worker to a high amount where there are no cost saving benefits in employing foreign worker to encourage the employer uses local worker. When the cost of hiring a foreign worker is higher compare to local worker, employer will choose to use local worker because they can save cost thus ill eventually increase the amount of skilled local worker in Malaysia which will increase the productivity and move Malaysia into a high income country. Both employer and government play a big role in order to reduce the country dependence on foreign worker. Employer who over depend on cheap foreign worker should try to shift use local to increase the productivity in long term while government should implement better regulation and enforce them to punish those employer which break the rules for using illegal immigrant in their firm and to prevent illegal immigrant to enter our country.

Conclusion In conclusion, we had more understanding about foreign workers policy in Malaysia. Nevertheless, the foreign workers play an important role as one of the workforce in our country since decade years. They bring their skills from their country and practice them at here. But, it also brings some problem and cases to us which even make our government headache. So, law enforcement should be taken serious, as we should treat the arrest and detention of undocumented migrant workers as an administrative offence, and not a criminal matter.

These undocumented workers will affect our daily life, as they would commit crime or practice illegal activities in our country which make our government hard to tackle on them since we don’t have their personal detail and document. So, enforcement on foreign works policy is vital. Besides that, instead we relying on foreign workforce, we know that it would be better for us to consider more on our domestic workers which can also have equivalent level of skills and performances.

This also follows to our MTUC aim which suggested that giving priority to our local workers. Of course, our domestic workers also need to improve themselves, not matter on hard-skills or soft-skills; we should upgrade our own knowledge and skills to fight in economy and global competition. It should be making clear that the interactions between governments are extremely important. The trade union leader should try to come out an agreement with the government on foreign workers policy which will benefit foreign workers and our Malaysian at the same time.

If does, it will be the win-win situation between two country. References A. Navamukundan. (n. d. ) Labour migration in Malaysia –trade union views. Daniel Lee and Richard Ho. (2011). Labour Shortage Issues Forum. Retrieved November 11, 2011, from www. seri. com. my: http://www. seri. com. my/v3/index. php? option=com_content&view=article&id=169:labour-shortage-issues-forum&catid=38:latestnews&Itemid=54 Evelyn S. Devadason and Chan Wai Meng. (n. d. ).

A Critical Appraisal of Policies and Laws Regulating Migrant Workers in Malaysia. Ken CK. (2002). Male foreign migrant workers and HIV/AIDS in Malaysia: risk environment, susceptability and implication for intervention. Retrieved November 3, 2011, from NLM Gateway: http://gateway. nlm. nih. gov/MeetingAbstracts/ma? f=102259889. html Nagiah Ramasamy. (n. d) The Future of the Trade Union Movement in Malaysia. Tenaganita. (n. d. ) Outsourcing in Labor or Trafficking in Migrant Labor?

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