Foreign workers 'boon to KL economy'

They have created more jobs for Malaysians and raised wages and GDP, says World Bank

KUALA LUMPUR • Malaysia's large population of foreign workers has, in general, created more jobs for locals, says a World Bank study as immigrant labour has filled important gaps in low- and mid-skilled jobs, while highly skilled expatriates provide specialised skills not available locally.

The finding is timely following public outcry over the effects of Putrajaya's fragmented and inconsistent migrant labour policies, which use a combination of quotas and levies that are unrelated to evolving market needs.

The latest furore was over the government's recent announcement that 1.5 million Bangladeshi workers would be brought in over the next three years, while the country plays host to more than two million registered immigrants and an estimated one million undocumented migrants. This latest plan has been temporarily shelved.

The World Bank's Malaysian Economic Monitor: Immigrant Labour study of last December stated that for every 10 new migrant workers in a given sector, 5.2 new jobs are created for Malaysians.

''This is due to relocation,'' said World Bank economist Mauro Testaverde in a presentation of the study at Universiti Malaya's Development Studies Department in Kuala Lumpur, The Malaysian Insider reported. ''As more foreign unskilled labourers are hired, a company is able to expand and create new medium-skilled jobs which will be taken up by Malaysians.''

The report also said a 10 per cent increase in low-skilled foreign workers raised real gross domestic product (GDP) by 1.1 per cent.

The 10 per cent rise in immigration flow was found to raise the overall wages of Malaysians by 0.14 per cent, with the greatest impact on those with at least some secondary school education who tend to be supervisors and managers.

But the wages of unskilled Malaysians, who comprise 14 per cent of the total labour force, would see a 0.74 per cent decline.

''This class of workers does need some protection and training to upskill and move up the value chain. This is where money from foreign worker levies should be used,'' Dr Testaverde said.

Another World Bank expert, Dr Ximena Del Carpio, said Malaysia's policy on foreign workers was fragmented and not aligned to its overall human resource development strategy. The senior economist said the foreign worker policy needs to be market-driven, evidence-based and tied to the agency which handles human resource strategy.

The measures, she said, could cut discrimination between locals and foreigners for jobs,wage discrepancies and abuse of migrants. ''Another problem is enforcement, which right now tends to look only at the security aspect,'' she added.

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A version of this article appeared in the print edition of The Straits Times on March 05, 2016, with the headline Foreign workers 'boon to KL economy'. Subscribe