Kuala Lumpur is full of aliens, legal or otherwise. In the recent weeks, there has been a strong call from those in power to reduce dependency on foreign laborers. Xenophobes only happy to jump onto the bandwagon that appeals to protectionism and central planning. This is indeed not the first time xenophobes have spoken out their mind.
The Malaysian economy is highly dependent on foreign labor. The fact that 41% of construction sector workforce is made up of foreigner stresses the importance foreign workers to our economy. Estimate has it that there are 2.6 million foreign workers in the country, or approximately 10% of total population of Malaysia.[1]
There are a few reasons for that and one of them as well as the simplest explanation is cost. Under the same labor and environmental requirements, foreign labors are willing to work for less compared to the locals; of course, foreign labor here refers to mostly low-level talents who privy not to higher education. Given the cost, it makes absolute sense to hire foreigners instead of locals. If the locals are willing to match the wages of foreigners, I am sure the composition of workers in the industries such as construction that demand low-level talents will tip in favor of the locals.
It is true that influx of foreign labors Malaysia depresses wages, assuming demand for labor does not increase, under typical situation. Without these foreigners, wages would be higher and closer to the level that matches locals’ preference. Yet, I would argue, industries which experience such wages depression are those that the locals are uninterested to participate in. On top of that, if it had not been for the increased labor supply, cost of construction will be higher and thus, an obstacle to economic development. Besides, Malaysian workforce on average is more educated than most of these foreigners. Stretching the line of reasoning further, the availability of foreign labors free up local resources — local human capital — for other more productive, higher talent intensive industries.[2] Indeed, it is a high time for Malaysia to move from manufacturing to services, up the value chain. For this reason, Malaysia needs to pay special attention to its education system.
Another possible reason for such a high requirement for foreign labor is shortage of workers. Despite the discussion of high unemployment among college graduates, Malaysia has a low unemployment rate; for the second quarter, the rate stood at 3.4%.[3] Not all of the unemployed, especially college graduate with degree in IT, mass communication, engineering or any other sexy courses would even think of toiling under the merciless sun welding steel, smoothing out the cement surface in effort to build yet another skyscraper to fill the sky of Malaysia, or roofs for most of us to live under.
If the number of unemployed graduate is not enough to explain the 3.4% rate, do not forgot frictional unemployment, those leave their jobs voluntarily for another jobs, which may be better. How many of you have heard a friend said he was in between jobs? That is frictional unemployment. And then, there is cyclical unemployment, which rises and drops according to seasons. In other words, quantity-wise, the number of workers and the availability of jobs may match or more than demanded but talent-wise, there is likely a shortage in the market.
This economic preference for foreign labors over local ones have prompted allegation that these foreigners are stealing jobs from the locals. On the contrary, nobody is stealing anything from anybody. It is simply something called competition and there will be winners as well as losers in a competition. These laborers are sometimes just thankful to escape the kind of poverty that persists in certain countries like Bangladesh or Myanmar. Their determination to escape poverty drives them to work hard. In all fairness, they should at least be rewarded with employment opportunity. I am willing to go farther to say that the locals, me included, which are used to hand outs, have a thing or two to learn from these foreigners. They may reach our shore in rags, looked down upon, but they have the drive that many of us — whom unashamedly demand for subsidy year in year out, as if it is our god-given right — do not.
Objectors to the use, or some may contend as excessive use, of foreign labor, have alleged that the presence of foreign laborers increase the probability of crime. They insist that most crimes are committed by foreigners. This is far from the truth and in fact, it is the locals that contribute to the level of crime rate we Malaysians currently experience.
Others have proposed expanding the use of robotics to reduce dependency on foreign labor. Alas, without doubt, labor cost, at least for low level talents, is much lower than the capital cost associated with robotics. The use of such capital-intensive resources is only justified when the cost of labor is high; high labor cost is associated with high level of education.
One argument against the use of foreign labor however may stand up. It concerns clash of culture. For this reason, it is wise to not allow a sudden influx of immigrants into a community. The locals need time to accommodate their expectation and to build trust while the foreigners need time to learn local culture. Nevertheless, with the expected closer integration among ASEAN member states — relatively freer flow of capital and labor — a good foreign labor policy will be the one that encourages liberal local attitude towards foreigners, expounding the fact that these foreigners are as much as human as you and I, Malaysians.
The sooner we get use to ASEAN’s Schengen area, the easier we Malaysians could integrate with the rest of the people of Southeast Asia.
[1] — Malaysia is home to an estimated 2.6 million legal and illegal foreign workers. They are critical to the nation’s valuable manufacturing and agriculture sectors, and many householders rely on foreign domestic workers. [Malaysian law to curb foreign workers, illegal immigration. AFP via Google News. November 12 2007]
[2] — Kindly compare my rationale to that of the Prime Minister’s:
KUALA LUMPUR, Nov 9 (Bernama) — Prime Minister Datuk Seri Abdullah Ahmad Badawi today asked employers to stop the “craze” to hire foreign workers as the move will not contribute to human capital development but will instead have a negative impact on the nation.
He said hiring of foreign workers, be it legally or illegally, would not help to upgrade the technology in the country as the foreigners recruited are not highly skilled and have low productivity. [Stop The Craze To Hire Foreign Workers, Abdullah Tells Employers. Bernama. Retrieved November 9 2007]
[3] — Key statistics. Department of Statistics, Malaysia. Retrieved November 21 2007.
4 replies on “[1448] Of before you shut the door, wait”
As with most economical issues, immigration is often counter intuitive. What seems like compassion can sometimes be cruelty and vice versa. I am in favor of immigration as a means of adding diversity and vitality as well as other benefits to societies but we are not yet living in an age when all borders can be thrown open.
Many migrants and economic refugees are not interested in longterm resettlement so methods of immigration based on temporary terms with the potential for interested parties to earn points towards staying while others just made money to bring back home might be preferable to the “jump the border game”.
I strongly agree with the foreigners and locals.
Right now, since the Charter and Economic Blueprint was recently signed, many of the locals of the 10-member countries of ASEAN still consider fellow ASEAN Citizens as “foreigners”.
I was explaining it to my girlfriend last Sunday on how those people we see on our daily lives are not aware of the progress and roadmap of ASEAN, on how they still see Malaysians and Singaporeans as “foreigners” and how Filipinos are seen as Foreigners as well if we visit other ASEAN countries.
A lot still has to be done, and hopefully by next year’s summit, 14th ASEAN Summit, all 10-member countries ratified and implemented the new ASEAN Constitution and ASEAN Economic Blueprint so that all of the 500 to 570 million ASEANs will be aware of the changes especially the roadmap.
As for us who follow these developments, we have a social task of helping in the information campaign, and for you and me, we are already aware so we can easily consider each other as fellow citizens and not as foreigners.
For me, since that historical signing, I started considering myself as an ASEAN Citizen and fellow ASEANs as “not” foreigners but fellow citizens :D
PS
Thanks for visiting “ASEAN Citizen” blog!
Dear moo_t,
I think your reasoning relies too much on the government. Market forces, not central planning, should determine what is required.
Further, crane is no substitute to foreign labor, vice versa. One does not have to choose one or the others. In fact, I would say they are complement. Both cranes and workers are required. But crane cannot weld metal, lay outr cement, etc.
On foreign labor exerts cost on society through medical requirements, the answer is easy, make them pay the equivalent taxes. The burden of financing public good must fall on all that enjoy it, or care to enjoy it. If it is subsidized services, make them pay the unsubsidized amount to make it fair for the locals.
Besides, talking about “cheapness” of labor, I believe those on the ground knows better of the cost and benefits analysis than the bureaucrats. Let businesses make their own decisions, not politicians.
Lastly, in Japan, that farmers are being subsidized. Without subsidy, it will die. Already agriculture is a shrinking industry in Japan, even with subsidy. (I’m not sure how discussion on Japanese farmers have anything to do with foreign labor though; it suffers a totally different issues altogether)
Failure to look into technology is a biggest failure of government policies on drafting the labor policies.
During the period of “foreign labour” shortage due to foreign labor tied up, I notice use of cranes take a sudden surge. Renting a crane, though expensive, can save time and labor. It seems the “shortage” has force the business to find alternative way.
IMHO, rely on cheap labor will make business lazy. And don’t forget, those “cheap labor” are not cheap if you take into account of training, interaction, medical welfare,etc. And some the hidden cost are actually transfer to the society, e.g. medical, security.
Take Japan as example, a farmer can take care many times the land compare to a farmer in Malaysia.