Foreign workers and the industries they work in

A question we have to ask ourselves as Malaysians is this: are we too reliant on foreign workers? The number of registered foreign workers in Malaysia is quite high; ranging at around 2.2 million reported by FMT as of October 2018. This number could have grown by now. Khazanah Research Institute’s findings note that the majority of these foreign workers are employed in either agriculture or construction sector.

Realistically, all 2.2 million registered foreign workers would not be operating in these industries alone. Let’s look at some of the industries that foreign workers are employed in.

Agriculture 

A Bank Negara Malaysia report showed that foreigners make up a fifth of employment in agriculture, construction and manufacturing. According to the report, 37.3 per cent of the total foreign worker population works in agriculture. That’s a whopping 800,000 foreign workers operating in that segment.

This is because Malaysia has a high yield of agricultural produce that is not only consumed locally but exported internationally. The gross output for Malaysia’s agriculture sector in 2017 was RM91.2 billion, which is an increase of 11.1% from the previous year. This RM91.2 billion can further be divided into different sectors such as crops, livestock, fisheries and logging.

For the most part, crops take up the biggest slice of the employment pie; standing at 761,393 personnel in 2017. The next highest employment rates are in livestock (36,025), logging (22,643) and lastly, fisheries (15,913).

Construction

 In that same Bank Negara Malaysia report, it stated the second highest demand for foreign workforce is in construction.

Malaysia is a developing nation that is striving to establish itself as an economic giant in the eyes of the developed world. However, in order to do this, there need to be elements of status within the country itself.

Out of the vast majority of foreign workers, 22.4 per cent of them is employed in the construction industry. Why? To further push our nation through, for progress. In a journal titled “The Employment of Foreign Workers at Construction Sites” by the Faculty of Civil Engineering at Universiti Teknologi Malaysia, it is stated the Malaysian construction industry employs roughly 1,214,000 people; out of which 70-80% are foreigners.

Services 

The services sector is a largely fragmented sector that comprises includes the likes of security, retail, wholesale, distribution and domestic help.

In the Foreign Labour in Malaysia: Selected Works report, 11% of all foreign employment in Malaysia work in the wholesale and retail sector while another 7% of foreign workers in Malaysia work in accommodation services such as hotels. The report added that jobs in the services sector such as hotel and food and beverage (F&B) were more stable compared to the agriculture sector.

Meanwhile, a security industry player mentioned that there were over 35,000 Nepalese security guards working in Malaysia in 2017.

Manufacturing

 The Department of Statistics revealed that the manufacturing sector in January 2019 employs over 1,091,560 persons.

 The Home Ministry suggested that the ratio of local to foreign workers in the manufacturing sector is 1:3.

A Bank Negara Malaysia report argued a readily available pool of cheaper low-skilled foreign workers distorts domestic factor prices and discourages industrial upgrading.

The report states that “it makes labour relatively cheap when compared to capital, and thus weakens incentives for firms to substitute labour for technology, or for greater value adding activities from the employment of higher-skilled labour.”

 While the total of both the agriculture and construction industries is roughly 60 per cent, the remainder comes from manufacturing (21.2%), the service industry (9.2%) and mining (4.9%). At this point in time it is quite impossible to suddenly halt the usage of foreign labour in pursuit of progress, but there are steps in place to deter it. For example, recently the government set foreign worker levies and quotas at a high cost to prevent the abuse these people looking to make a living.

In any case, Malaysia still has a long way to go to balance the usage of foreign labour in a bid to enhance our country’s status.

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