LAST_UPDATETue, 17 Jul 2018 1pm

Why Pakatan Should Have A Plan Before Reducing Foreign Workers

Despite the employment of foreign workers playing an essential part in our country’s economic growth, the government has expressed its commitment to limit foreign labour employment at 15 per cent for the country’s total employment rate by 2020 as outlined in the 11th Malaysia Plan (11MP) – in an effort to give priority to local workers.

"With the expected total workforce of 15.3 million people by 2020, the policy to limit the employment of foreign workers at 15 per cent will make the total dependence on foreign workers not exceeding 2.3 million people by 2020," Human Resources Minister Richard Riot vowed last month.

This vision was similarly pledged by Pakatan Harapan (PH) and outlined as one of its manifestos. Aside creating one million new high quality jobs, the opposition vowed they would prioritise local workers while increasing minimum wages by deporting two million foreign workers within their first term.

PH chief secretary Saifuddin Abdullah claims, “Wages (of local workers) have been suppressed. Why? Because of too many foreign workers slowing down the country’s move to automation.”

According to the Home Ministry, as of 2017 there are more than 1.7 million registered foreign workers in the country, a reduction of the 1.8 million in the previous year.

Hence, if PH were to triumph in the upcoming 14th General Election (GE14), how realistic are the coalition’s plans to fill up the vacancies in such a short amount of time after deporting the truckload of foreign workers in the country?

A Proper Plan Is Required To Counter Labour Shortage

While political and economic affairs analyst Professor Dr Hoo Ke Ping commended PH’s pledge, he deemed it unrealistic, especially in one political term.

Professor Dr Hoo Ke PingProfessor Dr Hoo Ke Ping“Without proper planning, if the Pakatan government does reduce two million foreign workers that would immediately cripple 20 to 30 per cent of the country’s workforce,” he shared with Malaysian Digest.

Hoo went on further to explain that, “Sabah and Sarawak will be mostly affected by the move, where the majority of the foreign workers are working in palm oil plantations.”

Currently, in the plantation industry, 77 per cent of workers in the palm oil plantation, or 328,000 of them, are foreign workers since locals are less interested in doing the job.

The Sarawak deputy Chief Minister Tan Sri Datuk Amar Dr James Jemut Masing earlier pointed out that the state is already short of 10,000 workers for the palm oil plantations and every year, RM1 billion is lost when the oil palm fruits are not harvested due to labour shortage.

The minister also revealed that the problem was due to the locals refusing to take up jobs in the plantation sector or lack of discipline while working in the jobs which are often taken up by foreign workers.

But apart from palm oil plantations being affected, Hoo says, “The construction and manufacturing industries will also be at risk as well, as most of the manufacturing factories in the country employ a hundred per cent foreign workers.”

The veteran economist then conveyed that even countries such as Hong Kong and China still heavily rely on foreign workers, which makes PH’s plan not only unrealistic but impractical and believes their plan to increase minimum wage also cannot be fixed in just a few short years.

Should the government or the opposition want to control the influx of foreign workers, Hoo stressed that they must start with the services or manufacturing industry.

“In the early 2000s, there was a rampant issuing of permits for foreign workers in the manufacturing industry. Only when Prime Minister Datuk Seri Najib Tun Razak took office then we started restraining the employment of foreign workers,” he said.

And to counter labour shortage, Hoo suggested that the country could mobilise the senior workforce for the services sector.

“In Singapore, to replace the issue of labour shortage, many senior citizens are encouraged to take up jobs in various sectors, such as in restaurants or become cab drivers.

“Since they are locals, they can demand for wages that are according to the Singaporean market rate. As a result, wages in the country increases all over the board,” he suggested.

In Singapore, it is not uncommon to see senior workers taking up jobs in the services industry.In Singapore, it is not uncommon to see senior workers taking up jobs in the services industry.

“In Malaysia, there are up to a million population that are retired and above 60 years old. In my opinion, once we remove these foreign workers, the senior population can be take them up instead,” he opined, adding that their Employment Provident Fund (EPF) savings might not last them throughout their twilight years after all.

On the other hand, during our chat with another economist, Professor Dr Shazali Abu Mansor, he admits that PH’s claim that the large amount of foreign workers is indeed the cause of suppressed and stagnant wages – but only because foreign workers are willing to take up any job at a much lower pay.

Professor Dr Shazali Abu Mansor.Professor Dr Shazali Abu Mansor.“When large numbers of foreign workers are taking up jobs at lower wages, the average salary in the country’s market rate decreases as well,” he explained.

So long as Malaysians have a mindset of relying on foreign workers to take up certain jobs, the economics lecturer at Universiti Malaysia Sarawak (UNIMAS) believes the country will still require foreign workers to do these jobs.

“Malaysians are always looking down on 3D (dirty, difficult, dangerous) jobs such as construction and agriculture, so the market for foreign labour will always be present if we maintain this mindset,” he said.

While Shazali agrees that the reduction of foreign workers is necessary to slowly increase the minimum wage, he argued that completely removing foreign labour from the construction and agricultural sectors is impractical.

“We do need to slowly reduce our dependency on foreign labour but it should be done in the long run.

“But before we do so, Malaysians need to change their mentality about working in hard labour jobs.”

Industries Must Be Prepared To Face Challenges

Another sector that relies heavily on foreign workers is the services sector, and should PH succeed in the GE14, over 71,000 foreign workers who are still working in the food and beverage (F&B) sector will face deportation – and their employers will unfortunately bear the brunt of it all.

Even after the Immigration Department recently revealed that foreign workers could only be hired as cooks in restaurants and not as frontliners, some eateries were already forced to shut down due to shortage of labour.

In our conversation with T.Muthusamy, president of Malaysian Indian Restaurant Owners Association (Primas), he revealed that many Indian restaurants are currently struggling to adapt to the lack of foreign labour – what more with the future policies.

“The restaurant sector is facing difficulties due to the many changes made in the hiring policies in recent years, and we do not have sufficient time to adapt to these changes,” he lamented.

And while they have tried hiring Malaysian workers, T.Muthusamy revealed the challenge with the locals is that they lack discipline and have a poor mindset.

“The restaurants have tried hiring local workers to offset the loss of foreign workers, but they have a mindset that their self-esteem is lowered if they are employed in the restaurants.

“Plus, we don’t find any consistency in discipline within local workers. This builds up pressure not only with the owners, but with the existing workers as well,” he explained.

Ayoob KhanAyoob KhanAnd unfortunately, this mentality has also caught on to the foreign workers as well, as they are now exploring other countries for more lucrative job offers.

“For now, many foreign workers prefer working in other countries as Malaysian wages are too low for them here,” said Ayoob Khan, president of the Malaysian Muslim Restaurant Owners Association (Presma).

While Ayoob said the association is looking into the possibilities of self-service in all Mamak restaurants, “From our in-depth study, Malaysians are more comfortable without self-service and they prefer waiters to serve them.

“However, we will not discredit having self-service in the future.”


Is Malaysia Ready For Automation?

Speaking of self-service, to address concerns regarding the dependency on foreign workers, Deputy Home Minister Nur Jazlan Mohamed has similarly urged F&B owners to be more open to the idea of automation.

The minister explained to FMT that while it may be a costly switch, in the long run, employers will get to save on manpower and costs.

Shazali gave a nod to the minister’s suggestion as he highlighted that technology plays a key role if Malaysia wishes to reduce their dependency on foreign labour.

“In developed countries, many repetitive processes in agricultural, manufacturing and services sectors are increasingly being replaced by robots and automotive machines, and this is instrumental in reducing foreign workers.

“For example, restaurants in developed countries have replaced traditional cashiers with automated screens where customers can just order by clicking on the screen and make cashless payments,” he opined.

Robot chefs working in a restaurant in Nagasaki, JapanRobot chefs working in a restaurant in Nagasaki, Japan

In fact, some local restaurants have already started automation like the Nam Heong Kopitiam in Ipoh, who in January this year created a buzz when it introduced its eight robot servers which were imported from China.

Apart from being efficient, the owners of the restaurant claim they could cut down on cost on manpower with this technology.

However, for this concept to be realised at all F&B outlets in the country, Shazali highlighted that our technology needs to be up to par with First World countries.

“So long as our automation technology remains stagnant, we will need foreign workers to do these jobs,” he said.

Despite these inputs, let's bear in mind that the ruling government has yet to unveil its GE14 manifesto, hence it would be interesting to see what  the Barisan Nasional coalition has to offer when it comes to foreign labour policies.

-- mD