Cheap labour and expensive brains

Nurul Izzah Anwar

Modified 24 Jan 2017, 3:28 am

MP SPEAKS As our public debt soars while the ringgit falls, the government once again proves its incompetence in managing the nation’s coffers.

The government’s haphazard treatment of instrumental policies is a manifestation of ineptitude as it stumbles through efforts to reduce our deficit from decades of financial mismanagement, waste and corruption.

Take for example the presence of foreign workers, a subject that remains contentious in Malaysia.

Understandably, it only makes financial sense for businesses to open their arms to an influx of foreign workers when the costs are low. But simultaneously, many of us complain of the low socio-economic status of the migrant community, and sometimes, of overcrowding.

A balance must be achieved - that foreign workers enter our economy at a moderate pace and be able to live decently, while businesses leverage their capital to also invest in upskilling local workers and in technology to sustain high productivity for a stronger economy.

Yet, our government continues to shy away from confronting Malaysia's current over-reliance on foreign workers.

Under Prime Minister Najib Abdul Razak’s leadership, the 11th Malaysia Plan’s goals to “accelerate human capital development for an advanced nation” seem, at best, unachievable.

Continuous set of fallacies

On the last day of 2016, Deputy Prime Minister Ahmad Zahid Hamidi announced that all employers will pay the levy for hiring foreign workers, beginning in 2017, as opposed to deducting the sum from the workers’ wages.

Barely two weeks later, the mandatory imposition of foreign workers’ levy payment on employers was rescinded, and postponed to 2018.

Coincidentally, last January, the BN government also walked out of another policy when it revoked the Public Services Department overseas scholarship that was awarded to 744 stellar students.

Back then, the government claimed that the reallocation of these students to local universities would boost the quality of local institutions.

Unfortunately, with Najib continuously slashing the budget of our higher education institutions year after year, everything that he mouths seems nothing more than mere fallacy.

Clearly, our government under Najib is inept in making good on any of its policies, such is the hasty back and forth of the foreign worker levy policy.

Over-reliance on foreign workers

It is most likely that the government chose to postpone its policy due to pressure from employers.

Understandably, the main gripe that employers have against bearing the levy burden is that they will soon incur more cost upfront.

But this reluctance by employers is precisely the intended effect of the levy policy - that it serves as deterrent against the practice of hiring foreign workers.

Employers of labour-intensive industries are especially worried, but a higher manpower cost can serve as an impetus to modernise the sector and heighten output. For example, the construction sector's over-reliance on physical labour is traditionally associated with low productivity.

Despite employing 9.3 percent of the workforce, the construction sector only contributes to 4.4 percent of the GDP.

The 2016 Malaysia Productivity Report recommends that the construction sector be “more aggressive in adopting modern technologies and practices to reduce its over-dependence on low-skilled labour.”

This transition can then reduce cost in construction methods and a safer working environment, in addition to better wages for workers.

Thus, for Malaysia’s economy to move up the value chain, it is now necessary to manage our foreign worker population. Even the 11th Malaysia Plan acknowledges the pertinence of a manageable foreign worker population, iterating that “the proportion of foreign workers in the workforce is capped at 15 percent of total workforce in 2020.”

Currently, we have four to seven million foreign workers in Malaysia, comprising 25-30 percent of our workforce.

Conversely, the over-dependence on low-skilled labour has left 200,000 unemployed graduates unable to leverage their skills for our economy. Why then should the government make a U-turn on its stance on foreign worker levy?

Reminiscent of public varsity budget cuts

This is reminiscent of continual, excessive budget cuts for our country’s public universities.

This year, our 20 public universities are expected to run their daily operations with a total of RM6.12 billion of federal funding - a 19.23 percent cut from the RM7.57 billion allocation in 2016, or a 30 percent markdown from the RM8.75 billion allocation in 2015.

In addressing this, Higher Education Minister Idris Jusoh simply stated that universities have found other sources of funding.

The shock to our universities would have been less drastic if the government has reduced funds gradually while establishing self-sustaining endowment and wakaf funds.

It is said that by the end of 2016, seven of our universities have collected RM13.25 million in wakaf endowments. But the same seven universities are suffering a net loss of RM95.39 million in budget cuts this year, compared with 2016.

Wakaf and endowment funds are critical pieces of university funding, and require time to be gradually collected and managed for a sustainable growth in income to be facilitated.

The overnight conversion from federal funding to endowment funds is haphazard and reeks of BN’s desperation caused by a failure in governance.

That the Malaysian government reversed its own policy shows cowardice and rash policy-making.

An ineffective and sycophantic elite

Transport Minister Liow Tiong Lai had said that a postponement of the levy decision was “necessary in the absence of a proper ecosystem under the newly introduced Employer Mandatory Commitment (EMC) to resolve issues involving foreign workers.”

Regardless of whether this ecosystem is present, it will never assuage the employers’ perennial problem of cost increase as long as the burden of paying the levy is transferred into their hands.

What the BN government should have done instead was implement a transition plan that would allow employers to adapt to a new policy, without excessive financial strain.

The implosion of the 1MDB scandal has cost us financially as the ringgit continues to depreciate, our public debt continues to climb, and investor confidence in Malaysia wanes.

Yet, the BN government is incapable of implementing bold reform measures, regressing time and again to the tune of an ineffective and sycophantic elite.

Our overdependence on foreign workers is unhealthy to the foreign workers and to our economy. This flawed policy is coupled with the thoughtless neglect of the nation's best brains.

A beautiful nation such as ours requires leaders who are willing to prioritise the nation over their narcissistic selves.

We urgently need clear-cut and dependable policies as we traverse the future to build a path to higher wages, higher productivity and sustainable economic growth.

NURUL IZZAH ANWAR is PKR vice-president and Lembah Pantai MP.

The views expressed here are those of the author/contributor and do not necessarily represent the views of Malaysiakini.

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