Wages in Malaysia are generally depressed.
Protectionists blame foreign labor as the main cause of that depression. According to them, if we are less dependent on foreign labor — low-skilled mostly — wages will go up. So, they want to kick out as many foreign labor as possible. Even all, for the extremists.
They make that assertion without considering foreign labor are active in sectors mostly different from the ones locals are participating in; there simply not enough locals wanting to participate in the sectors filled with foreign labor.
Removal of these foreigners will no doubt increase wages up as the law of supply and demand demands it, but that is largely true only in those sectors. The problem of wage depression in the larger economy will not be addressed or significantly affected with the absence of foreign labor.
In front of our eyes is a natural experiment to prove that. Indonesia has decided to stop the flow of maid into Malaysia:
JAKARTA, June 25 (Bernama) – Beginning today, Indonesia will halt temporarily sending maids to Malaysia until there are discussions on the review of the memorandum of understanding (MoU) on the matter. [Indonesian Maids To Malaysia Halted Temporarily. Bernama. June 25 2009]
I am confident that while wages for maids will rise, wages in other sectors will remain largely unaffected.
In fact, Malaysian productivity might fall because Malaysians who face high opportunity cost between housework and professional job might not be able to do what Adam Smith wrote in The Wealth of Nations: specialization.
And in economics, besides supply and demand, productivity is a major component in the determination of wages.
4 replies on “[2018] Of with ceasation of supply, protectionist will be proven wrong”
Malaysian receive peanuts.
I can vouch for this.
After graduating from a German Uni in 2003, I applied for a position as a general engineer at Texas Instruments in Gombak. I was discouraged upon hearing the starting pay was RM2400. Then I applied for the same position with the same work description but in Austin, TX, USA. The starting was USD3500. I opted for TX eventhough I did not know anyone there. 2 years later another Malaysian from UM come to work at TX to take my former job as I was promoted. HE complained that TI pays around RM2300 in Gombak also for the same post. He received USD3600 for the job in Austin. Now you make your own conclusion.
I wouldn’t take the typical Malaysia Boleh simpleton excuses such as “less foreign worker, wages will go out”.
It is a series of incentive,carrot and stick measurement. I recall the previous “shortage” of Indonesia worker in construction, the developer are FORCE USING MORE MACHINERY like big crane than they previously does. And amazingly, it is spontaneous response, when they learn that the CHEAP worker without using more cranes has cost them dearly when something happens to the worker supplies.
So there is lots of hidden agenda that hide behind the for various industry. And bare in mind that Malaysia are somewhat still promote the industrialise way of sweat shop similar to slavery, than increase efficiency.
it is not entirely the employees/graduates’ fault. pay peanut, get monkey.
Malaysians are too spoiled, because they come out of uni and expect a “good” salary.
In addition, they don’t have the productivity to even justify the pay they are asking for.