Align foreign labour policy with labour demand, M’sia told

comments     Chong Pooi Koon, Bloomberg     Published     Updated

Malaysia should look at labour market demands more closely when determining foreign worker inflows as its current approval system doesn’t sufficiently reflect the needs of industries, the World Bank said.

The government must improve its existing evidence-based system for identifying labour shortages in the economy and change its levy structure, the World Bank said in a report released in Kuala Lumpur today.

The use of a combination of quotas and levies that are "semi-static" and seldom change can’t keep up with varying market conditions, it said.

“The current approval of immigrant labour does not reflect labour shortages or labour market demands,” the bank said.

"Phasing out static quotas by restructuring the levy system to serve as a pricing mechanism that controls migrant inflows" will keep immigration aligned with evolving genuine labour market needs, it proposed.

Complaints of rising costs

A nimble structure that channels workers more efficiently to industries that require them may keep wage bills contained, amid complaints from businesses of rising costs.

Manufacturers have demanded structural changes to policies on human resource and foreign workers that will provide clarity and consistency for the sector as Prime Minister Najib Abdul Razak’s government tries to reduce reliance on overseas labour.

The country’s economic immigration management system is fragmented, with more than 10 different ministries, and departments within those ministries, directly engaged in the approval of immigrant labour, the World Bank said.

There are about 2.1 million registered foreign workers and probably more than one million undocumented immigrants in Malaysia, it estimates.

Malaysia will raise minimum wages further from July 2016, Najib said when presenting Budget 2016 in October. Manufacturers are among those who are urging the government to consider delaying the increase.

- Bloomberg



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