Tag: foreign labor

Categories
Society

[2747] Food racism: It still stinks!

I think a lot of us Malaysians have engaged in those long never-ending debates about racism before. The problem with these debates is that they are framed within the context of Malaysian citizenry and more often than not, they ignore the universal value of equality across the human race. This gives rise to hypocrisy among those who believe in equality among Malaysians. They disapprove of racism against Malaysians, but have no problem practicing it against foreigners.

I write this as a reaction to the proposal in Penang to ban foreigners from becoming cooks in that state. I find the rationale behind the proposal extremely flimsy: the state government wants to preserve food authenticity. It is about protecting Penang heritage.

This assumes cooking styles and recipes cannot be learned, with cooking being an innate special ability. It assumes there is something special about Penang people cooking Penang cuisine.

But the reasoning should be deconstructed to its logical end, right up to its building blocks. If we are worried about food heritage, then perhaps some Malaysians should be banned from making some Malaysian food.  Chinese cooks should not be allowed to make Malay food. Malay cooks should not be allowed to prepare Indian food. Run the logic of innate cooking ability for every single ethnic group and see if you like the results.

The differentiation between Malaysian and foreign cooks is just a pretty veneer hiding the ugly prejudice. One might argue there is a difference between racism and anti-immigrant sentiment: we are not discriminating against a race but against immigrants in general. But deep down there beyond artificial categorizations, is there really a difference between racism and xenophobia? Both definitions have more than a tinge of prejudice in it. Xenophobia is just racism by another name, it smells just as stink.

Besides, the proposed ban will likely affect foreign workers from poor countries. What if the cooks are of European origin? Would we worship them as gods instead? That line separating racism from xenophobia looks thin and blurry, if there is even a line in the first place.

Additionally, around the internet, the question of hygiene has been raised to suggest foreign workers are dirty people and of poor health, supporting the proposed ban and more importantly, revealing a crasser form of racism. The counterpoint on hygiene is that if you have gone to any of the stalls in Penang manned by the locals, you would conclude hygiene is not a priority of those hawkers. I definitely concluded so when I ate my noodles and cendol on Macalister Road in George Town recently.

I am not a good cook myself but I did try cooking when I was away as a student abroad. It appears to me that you can learn cooking and what makes it good is practice. I do not practice my cooking but I am quite certain if you learn and practice something, you will be good at it. If you intend to work as a cook, then you will need to go the extra mile to be good at it.

After all, we have Chinese Malaysian cooks making relatively good roti canai on Goulburn Street in Sydney. Does that make it less authentic? I ate the roti canai anyway and ordered another. I am sure there are more examples of that in Malaysia and all around the world. If we truly bought into the point about food authenticity and heritage, then these Malaysians should be condemned for cooking something belonging not to their ethnic heritage. But we do not.

In fact, a lot of us are proud of them for spreading Malaysian culture abroad. And for those of us who travel, sometimes we miss the food from home and we are thankful we can find Penang food just around the corner in Chicago, for instance. Some of us cannot eat anything else but Malaysian food even after years of living abroad, mixing only in Kampung Malaysia in London and elsewhere, which is a bit worrying but let us not go there for now.

So, why would it be okay for Malaysians to cook Malaysian food but not foreigners? Simple. We advocate equality among Malaysians, but to hell with others. In my books that prejudice comes close to racism.

At the end of the day, the judge is the customers. If they like you, they will patronize your stalls or restaurants, paying you good money for a good meal. If you are a bad cook, whoever you are, Malaysian or not, the photo-snapping hungry crowd will not visit your establishment all too often. We do not need the government to tell us we cannot buy food from certain parties. We can decide that ourselves.

The Penang proposal is not the only example of that kind of racism. When the Federal Territory Minister wanted to ban the homeless and soup kitchens from the Kuala Lumpur city center, civil society stood up against him and all the state machineries under his control. In defending the proposal, among others, the minister said most of the homeless and beggars were foreigners anyway (not true because based on news reports, City Hall ”relocated” 965 homeless persons in 2013, with about 13 per cent of them foreigners). In his imagination, that makes the proposal more palatable. Since the homeless were foreigners, he thought he could do whatever he wanted, forgetting that foreigners are human beings too.

And this does not stop there. Some of us think immigrants are lesser beings. That is why we abuse them. How many times have we heard of foreign maids abused in Malaysia? Some of us want them out completely, putting all kinds of blame on immigrants, regardless whether it is true or not. Low wages? Immigrants! No jobs? Immigrants! Rising crime rate? Immigrants! Low women labor participation rate? Immigrants!

Of course, really, they do not mean all immigrants and definitely not those under the Malaysia My Second Home program. Oh no, not the so-called high-skilled workers. Just immigrants from certain poor countries.

Citizenship grants us certain rights, but that does not make non-citizens less human. They bleed red too, like Malaysians.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved
First published in The Malay Mail on July 17 2014.

Categories
Economics

[2550] Labor shortage in the palm oil industry

I do not typically post news articles these days, but I think this news article is particularly relevant on one issue that I raised earlier.

MALAYSIA is losing billions of ringgit in palm oil exports because there is not enough foreign workers to harvest fruit bunches in the oil palm fields.

The Malaysian Palm Oil Board (MPOB) estimates that the industry need to hire another 40,000 foreign workers to harvest the riped fruit bunches in order to achieve the 19.3 million tonnes of oil output target.

[…]

“The trees are fruiting, but there’s acute shortage of harvesters and this is affecting the country’s palm oil export earnings,” he told reporters on the sidelines of MPOB seminar titled “Labour – Key Driver For Continued Sustainability of the Oil Palm Industry” held here yesterday.

“If the government approves of another 40,000 foreign workers, we can reduce wastage and surpass the 19.3 million tonne output target easily,” Lee said.

It is estimated that millions of tonnes of fruit bunches rot in the fields because planters are not able to hire enough foreign workers to harvest them. [Labour shortage hits palm oil export earnings. New Straits Times. May 15 2012]

This is the difference between debating from market knowledge with context and theorizing by reading one line in a news article.

Categories
ASEAN Economics

[2018] Of with ceasation of supply, protectionist will be proven wrong

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.

Categories
Economics

[1976] Of it is just as crowded over there

Read the mainstream press and it is hard to miss that the Economic Planning Unit and the Ministry of Finance are trying to market a new economic model to replace old ones. I fear that this new model is misguided and will lead Malaysia down the wrong path.

Read the mainstream press and one will find that it is popular these days to state that Malaysia needs to go up the economic value chain. Almost always accompanying that is rhetoric calling for Malaysia to graduate from its addiction to low-wage, low-skilled workers which, by and large, refers to dependency on cheap foreign labor.

Policy-wise, this has been translated into restriction on recruitment of cheap foreign labor. As proof, an astronomical levy on recruitment of foreign workers was imposed as part of the second stimulus package.

In time of economic slowdown, that particular action does not make sense and luckily, the Najib administration understands this and has decided to postpone it indefinitely. But even without a slowdown, that is no way to move forward due to uncertainty of any country’s development path.

Nonetheless, it is true that Malaysia needs to move up the value chain. We have been benefiting massively from early adoption of a liberal economy but other recently liberalized economies like India and China are finally catching up with Malaysia, and at an amazing pace.

Rapid reduction of poverty and continuous registration of high economic growth are testaments of how fast these countries are catching up after abandoning flawed economic models that ignore the importance of private property as a basis of a society.

Not only are they catching up rapidly thanks to liberalization, with their overwhelmingly larger and cheaper supply of labor, they are crowding out Malaysia and its peers like Thailand and the Philippines from the low-wage, low-skilled and labor-intensive niche. Penang, for instance, is already seeing multinational corporations migrating out from the state to Vietnam and China. This trend occurs because, among other reasons, of the availability of cheaper and larger supply of labor.

From this perspective, Malaysia is indeed losing its competitiveness; Malaysia is unable to compete in a low-wage model. If Malaysia fails to react, challenges from these low-cost countries have the potential to wreak havoc on the Malaysian economy. Fearing being pushed to the margin in the global market, Malaysia seems to be left with nowhere to go but up in the value chain.

Going up does not automatically mean actively restricting recruitment of cheap foreign labor, though. Cheap foreign labor still has roles in the Malaysian economy, even as its importance continue to diminish and even as other countries are able to excel at low-wage, low-skilled industry better than Malaysia.

This point is all the more tenable since in the long run, price equalization will happen to bring some kind of equilibrium between Malaysia and other competing countries.

The new equilibrium for low-wage, low skilled industry — perhaps especially for manufacturing — for Malaysia may be below its current level but the requirement for such industry will still exist since it provides goods or services which are hard if not impossible to trade. Somebody will have to do it.

Restriction on recruitment of cheap foreign labor is doubly unhelpful if the locals themselves refuse to take up low-wage low-skilled jobs. The restriction will create upward pressure on prices which include wages, pushing up the cost of living unnecessarily high when access to a large source of cheap labor to stabilize prices is available in the region.

In an open economy, that pressure will attract cheap supply of labor to act as a counterbalance. If that source is unavailable locally at the right prices, it will come from abroad.

That is already happening in Malaysia and the same trend is observable in the United Kingdom, where Eastern Europeans are taking up low paying jobs which the locals are reluctant to do as cheaply as the immigrants are willing. The same is true in the United States but instead of Eastern Europeans, they are from Mexico or other parts of Latin America.

A restriction on foreign labor will prevent that from happening, forcing prices and wages to go up. I feel this point must be stressed and hence, I repeat, that will inevitably cause the cost of doing business to increase.

The upward pressure on wages has been suggested as a tool to attract talents into Malaysia as an effort to take Malaysia forward beyond low-wage low-skilled economy into the realm of new economy.

This, however, confuses an increase in nominal wealth with an increase in real wealth. What is the point of being paid higher wages when the cost of living goes up accordingly, or higher?

In other words, the restriction which drives nominal wages up really makes no difference in real terms.

It must be noted that any increase in real wealth is largely due to productivity. This is not a mere opinion. Rather, it is an economic fact.

If one is less willing to believe mainstream economic theory due to the unfavorable popular reputation that economists currently suffer, then do refer to any econometric model on the matter; the correlation is strong and the causal relationship is enticing. Any effort at moving up the value chain must take this into account.

By moving up the value chain, it inevitably means greater application of science and innovation to increase productivity. A highly educated workforce will be required if the economy is to enjoy higher productivity.

In light of this, the question is not whether our addiction to cheap labor is a barrier to take the economy to a higher plane.

Instead, the questions that demand answers are: does Malaysia have a highly educated workforce; does Malaysia have the talents to fulfill the prerequisite of a high-value economy?

With a minority of its population holding a graduate degree and with an education system that seeks to brainwash its students rather than encourage critical thinking, it is a stretch to answer the questions in the positive.

That, by no means, is a reason to throw in the towel but it can help to refocus our energy from wrongfully vilifying low-skilled foreign labor to educating Malaysians better.

What is needed is an education system that demands the biggest effort from all. Schools, colleges and universities need to be liberalized to encourage development of competitive, thinking and open minded workforce, not yet more groups to be goaded for political purposes.

While these workforce is being developed, foreign talents should be welcomed and even offered citizenship.

Furthermore, just as the argument that low-cost giants are crowding Malaysia out from the low-wage, low-skilled niche, what actually guarantees that Malaysia can break into the high-value, high-skilled niche already filled with countries that with highly educated workforce?

Somehow, the rhetoric and the central planning action by the government which lead to curbs on foreign labor seems to suggest there is heavy competition in low-skilled industry but not in high-skilled industry.

”It’s crowded here, let’s move over there. Simple.” Well, it is not. While the pay off from a high-value economy is huge, it is naïve to think that there will be no competition.

Just imagine how much resources will be required to reverse the serious brain drain Malaysia has been experiencing for so long. Malaysia is way behind the curve in competition for talents. Compounding the issue is unfair practices by the government that make certain groups of Malaysia unappreciated.

If restriction of employment of cheap foreign labor is used as a stick to force Malaysia up the value chain, the danger is that Malaysia might fail to break into the high-skill niche and then finding itself with a largely dismantled low-skill industry.

With a serious lack of talent in the local economy, Malaysia might not only find itself entrenched in the middle-income trap, it might fall behind in comparison with its peers.

Unnecessary hostile position against cheap foreign labor might cause Malaysia to not have a fallback position if there is an error of judgment.

It is therefore, in my humble opinion, imperative that we ensure the ledge on the other side of the gully is properly secured before we make the jump across rather than chipping off the ledge we are still on. If we find ourselves in mid air only to realize that the ledge on the other side cannot support us, the next place we will be is at the bottom of the gully.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

First published in The Malaysian Insider on May 4 2009.

Categories
Economics Society

[1448] Of before you shut the door, wait

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.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved

[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.