Migrant labour helps Malaysia: World Bank

Report says it helps keep business costs down, allows employers to expand and create jobs

KUALA LUMPUR • Untrained foreign workers in Malaysia help the economy by allowing businesses to keep costs down, thus enabling these employers to later expand and employ more local skilled workers, according to a startling World Bank report.

In its annual report titled Malaysia Economic Monitor: Immigrant Labour, the fund said an influx of 10 migrant workers would result in 5.2 jobs for Malaysians and a 1.1 per cent net increase to the gross domestic product.

The assessment differs from the general view that the influx of low-skilled migrant workers depresses salaries and job opportunities for locals.

Still, the World Bank said Malaysia needs to manage the inflow of these workers better, as reported by Malay Mail Online.

"Low-skilled immigrants fill workforce gaps, reduce production costs and expand output and exports," it said. "As a result, unskilled employment increases and profits rise, which increases investment and the demand for higher-skilled Malaysians."

The report did not deny that the influx of many unskilled immigrants depresses local wages, but that it affected only the least-educated.

Malaysia has a total of 14.3 million local workers, according to government data.

There are also six million migrant workers, about half of them working in the country illegally.

The World Bank report said that the overall fiscal impact of migrant workers is small.

Still, the Malaysian government needs to do more in how it brings in thousands of foreign workers into the country, it said.

"There are more than 10 different ministries, and departments within these ministries, directly engaged in the approval of immigrant labour," it said.

World Bank senior economist Rafael Munoz Moreno said that the one step that needed to be taken by the Malaysian government is to phase out third-party agents in bringing in the migrants.

"The role has to be taken by the employer; the responsibility has to lie with the employer.

"By doing that, it will reduce the cost and there is a very clear accountability of who is responsible for these people.

"In the current system, it is unclear whether it is the third party, intermediary or the final employer, and as a result, nobody takes the responsibility of sending them back when the contract is over," he told Malay Mail Online.

World Bank's country manager to Malaysia Faris Hadad-Zervoz told the news website that the recommendations have to be complemented by human development policies. This to create an adequate supply of relevant, educated Malaysians who are productive to meet the labour demand not only for 2020, but beyond.

Meanwhile, the Malaysia government is planning to push for new laws next March that will impose higher fines on employers who hire migrant workers illegally, said Minister in the Prime Minister's Office Paul Low.

He said most of the illegal migrant workers did not enter Malaysia unlawfully - they typically overstayed as their passports were withheld by employers.

A version of this article appeared in the print edition of The Straits Times on December 19, 2015, with the headline 'Migrant labour helps Malaysia: World Bank'. Subscribe