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This article first appeared in The Edge Malaysia Weekly on April 30, 2018 - May 6, 2018

ENOUGH guesstimates. If national security and economic development are not good enough reasons, then perhaps the slow pace at which the people’s take-home pay is rising should prompt policymakers to give the exact figure of foreign workers in Malaysia.

After all, low pay growth spells unhappy people, and handouts cannot be a permanent solution for everyone, especially if the government hopes to have a decent size of taxpayers with high income.

Going by individual income data growth in recent years, it is sad to note that the median monthly income of Malaysia’s 8.42 million citizens who are salaried workers grew from RM1,500 in 2011 to only RM2,000 in 2016. This represents a compound annual growth rate (CAGR) of 5.92% over the five years.

For the 1.73 million non-citizens, who make up 17% of the official base of wage earners, the median monthly income rose from RM800 in 2011 to RM1,200 in 2016, data from the Department of Statistics Malaysia (DoSM) shows.

While the absolute gain is smaller, the median income for non-citizens saw a higher CAGR of 8.45% over the same period. Including the non-citizens, the overall median monthly income growth for Malaysia’s 10.16 million official base of salaried workers went from RM1,320 in 2011 to RM1,703 in 2016, reflecting a five-year CAGR of 5.23%.

Not only are the median monthly incomes of citizens growing slower than that of non-citizens, the median income growth for workers with tertiary and secondary school education is also slower than that of those with only primary school or no formal education.

Half of those with tertiary education earned less than RM4,042 a month in 2016, up from RM3,077 a month in 2011, reflecting an average annual growth of 5.61% over the period. Those with secondary school education saw the median monthly income rise from RM1,443 in 2011 to RM1,845 in 2016 — a CAGR of 5.04%.

The annual average growth in median income over the same period was 8.99% for those with primary school education and 9.97% for those with no formal education. Similarly, the median income for managers and professionals — which saw a five-year CAGR of 6.58% and 7.22% — came in below 11.03% for agricultural workers and 8.23% for production workers or plant and machine operators and assemblers.

To be sure, the lower income group likely benefited from the minimum wage policy implemented in January 2013. From July 2016, the minimum wage was raised for the first time from RM900 to RM1,000 a month in Peninsular Malaysia and from RM800 to RM920 in Sabah and Sarawak. A second increase is expected this year and the ruling government has indicated the possibility of moving the minimum wage to RM1,500 a month in the coming five years.

There is a need to lift the floor for everyone. So far, the movement has not been as desirable higher up the ladder. Is enough being done to ensure there are no hindrances to achieve the country’s goal to create a lot more better-paying jobs for the locals?

While the country’s economy has benefited from a supportive immigration stance, we know from research done by Bank Negara Malaysia that a large share of jobs created in 2015 (64.4%) and 2016 (81.5%) went to foreigners, and Malaysia’s transition to a high-income and developed nation is at risk if firms remain unwilling to pay more wages despite commensurable productivity gains.

Simply put, the availability of cheap foreign labour allows salaries for locals to be kept low. We also know not enough high-income jobs are being created.

Given the data’s importance to policymaking, researchers are pushing for a more authoritative figure of foreign workers here to be made publicly available, fast.

“While foreign management is a top policy priority in Malaysia, the number of foreign workers in the country is a perennial mystery,” ISEAS-Yusof Ishak Institute senior fellow Lee Hwok-Aun and economic consultancy Khor Reports head of research Khor Yu Leng write in an April 25 paper, referring to Malaysia’s declared priority of reducing dependence on low-skilled foreign workers.

“It is imperative, and possible, for the Malaysian government to provide credible estimates of the number of foreign workers. Increasing clarity and veracity in this most basic information will enhance public discourse and policymaking,” write the authors, who note the challenges posed by undocumented workers and persons to the authorities but conclude in their paper that government agencies with the relevant data “should engage in more rigorous analysis and consider availing the raw data as a good public source for researchers to access”.

Information such as the nationality of SIM card holders — through which research estimated seven million foreign workers in the country — is among other sources that the authorities could explore to come up with a more convincing estimate of foreign workers here.

In their paper “Counting Migrant Workers in Malaysia: A Needlessly Persisting Conundrum”, Lee and Khor estimate the number of foreign workers in Malaysia at “possibly around 5.5 million” after poring over data from the Department of Statistics’ Labour Force Survey 2016 (LFS) and the Ministry of Human Resources’ National Employment Returns (NER).

According to the newly published LFS 2017, there are 14.95 million people in the labour force, of whom 12.68 million are citizens and 2.27 million are non-Malaysian citizens.

Borrowing the words of the researchers, the LFS is an authoritative source to track labour participation, unemployment and sectoral and occupational changes in the labour market. However, if the wide gap between researchers’ estimates and official data is to be believed, a lot more work is needed when it comes to estimating the size of the foreign worker population here towards aiding their welfare and the country’s economic and social development. A bigger group of citizens with higher income also augurs well for the nation’s coffers.

 

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