KUALA LUMPUR (Aug 21): The Ministry of Human Resources (MOHR) is to conduct a study on the socio-economic implications arising from the employment of low-skilled foreign workers and international internship programmes, and will prepare a report on the study's findings by February 2020.
In a statement today, MOHR said the study will look at the perspectives of employment, job creation, wages, productivity and automation, and will be conducted by the Institute of Labour Market Information and Analysis.
In addition, the study will evaluate the social perspectives of health, crime, education and public facilities.
"This study will then propose recommendations and plans of action to overcome the issues, challenges, limitations and prevailing weaknesses. It is expected that this report will be ready by February 2020," the ministry said.
MOHR said the study will adopt a stakeholder perspective, and seek "active participation" and input from multiple stakeholders via focal group discussions, workshops and town hall meetings, with the ministry periodically providing updates on such activities.
It added that the economic implications of the high reliance on foreign workers has been adequately researched and documented, but not much has been done in terms of studies on the socio-economic implications, particularly on its impact on reduced employment opportunities, wage suppression, particularly for employees whose skill scope is within MASCO (Malaysian Standard Classification of Occupations) Group 9, and on labour productivity.
MOHR said that as of May 31, 2019, there were 1.93 million low-skilled foreign workers in Malaysia. The majority of these workers are employed in the manufacturing sector (34.7%), followed by the construction (23.4%), services (16.4%), plantation (14.6%) and agriculture (8.3%) sectors.
In terms of provenance, 35% of foreign workers are from Indonesia and 28% are from Bangladesh, with MOHR noting the issue over the prevalence of low skilled foreign labour is further compounded by the presence of "substantial numbers of illegal foreign workers".
The ministry added that it was conscious of the intake of foreign workers that has now become a relatively steady trend, due to employers seeking cheap labour and the difficulty in recruiting Malaysian workers in the construction, plantation and some manufacturing industries.
"Notwithstanding the needs of the business community, the ministry is fully cognisant that the continued reliance on foreign workers can have adverse economic effects on the structural transformation of the Malaysian economy and socio-economic effects on local labour market outcomes," it said.
MOHR added that it was aware of concerns raised by certain quarters that the continued reliance on low-skilled foreign labour will adversely affect the structural transformation of the Malaysian economy, and that it is a roadblock to Malaysia achieving high-income status.
The ministry also said there was a lack of evidence-based studies to prove whether the continued reliance on low production technologies will weaken the case for increased automation and other productivity enhancement initiatives and the continued creation of low-skilled jobs will maintain Malaysia's reputation as a labour-intensive nation.
It added that public data is lacking on the number of international students undergoing their practical internship in Malaysian firms and their impact on the economic and socio-economic environment.
"Some claim that such internship programmes do potentially impact the labour market in terms of employment and wage rates in selected industries. Some others claim that the high number of international interns undergoing practical training here will deprive Malaysian students of such opportunities," said the ministry.