Malaysia is too reliant on foreign labour. Putrajaya knows this and wants to cut out foreign workers in stages. But industries say they need time, some with very good reasons.
Take the agriculture sector, which is almost entirely reliant on foreign workers. The Federation of Vegetable Farmers Associations of Malaysia has already issued a warning that vegetable production is expected to see a 40 per cent shortfall because of the shortage of foreign labour.
The warning is another name for a coming price hike of greens. Makes sense. Without farm hands, there will be less produce to sell. Ditto the palm oil industry, where the hit is a lot more severe.
Plantations and Commodities Minister Datuk Seri Johari Abdul Ghani revealed in Parliament on Feb 28 that the industry loses an annual export value of RM7.9 billion due to shortage of workers. Until someone comes up with a harvester to pick the fruits, labour is the answer for such a tedious job. And that, too, foreign labour.
There is a misperception that needs to be cleared. Many Malaysians think that foreign workers are taking jobs away from locals. This isn't true, says a Khazanah Research Institute study, arguing that foreign and local workers occupy different employment spaces.
It, however, admits that a small proportion of least educated Malaysians do face job displacement or wage suppression. Be that as it may, both policymakers and industry players agree that cutting foreign workers is a right thing to do.
The latter's concern is about when and how the cut is made. As made clear already, the agriculture and palm oil industries aren't ready. So aren't the manufacturing and construction industries. How should Putrajaya proceed then?
Here is an economist's take. Professor Datuk Dr John Antony Xavier says the government should give the industry a deadline to limit its foreign workers and adopt automation.
After which, he adds, Putrajaya should impose a payroll tax or levy for every foreign worker, either of which can subsidise the higher wages paid to locals.
To Xavier, automation enables two things. One, it makes higher wages possible for locals. Two, higher wages will in turn compensate for the dirty, dangerous and demeaning stigma, thus making it attractive to locals.
To be sure, not all jobs can be automated. Some foreign labour will always be needed, as some developed nations with ageing population are discovering. Japan is an example.
A deadline to wean ourselves off foreign labour is a must. But it must be worked out with industry players. And so must the target. Otherwise, old laments will continue.
Consider the 15 per cent by 2025 target set by the 12th Malaysia Plan. Was it evidence-based? Very unlikely. Translated, the target is 2.4 million foreign workers. We are about nine months away from 2025, but by Putrajaya's reckoning, we have already met it.
Policymakers may need to get more realistic. They must listen to the pulse of the nation's industries. At the same time, the captains of commerce must know that over-reliance on huge numbers of unskilled workers has dangerous consequences for the country.
The KRI study, too, highlights this. Low-cost structure of such an economy, it says, "detracts from investment in innovation and high-skill work, potentially slowing down our development towards a high-income nation". Cheap foreign labour may eventually prove to be expensive for the country.
