Malaysian Perspective: Why Foreign Workers Are More Favoured Than Local Workers?

For many years, Malaysia has become the haven for foreign workers. Most of them come from places like Nepal, India, Indonesia, Bangladesh, Myanmar & Philippine. Some of them have permits while some don’t. There is also a general identity attached to all these workers.

For instance, Nepalese are often hired to work as the Gurkha security guards. Those from India are placed in Mamak (Indian-Muslim) restaurants, a popular 24 hours outlet in Malaysia. Indonesian men & Bangladeshi are very synonymous to construction sectors here. As for women from Indonesia & Philippine, they are often hired as domestic helpers like maid. Lastly Myanmar people, mostly refugees are employed to work as cook, waiter & waitresses in Chinese restaurant

Reasons to employ foreign workers:

(1) High productivity. Productivity is defined as output per worker. Although most of them do not receive formal education or complete secondary level, their productivity is comparable or even higher than the locals here who finished SPM (Sijil Pelajaran Malaysia) which is equivalent to O-Level. All because they have high willingness to learn & most important they don’t complain unlike the locals. They are fast & efficient too. They are able to endure long working hours, as minimum as 12hours a day, 7 times a week. This is very obvious for Nepalese guards, Indian workers in Mamak restaurant, Myanmar workers in Chinese restaurant & Indonesian maids.

This resembles a working attitude that is enviable by locals. I know a Myanmar worker who told me that he works from 9am to 11pm in a restaurant near my place. While I was at my friend’s place, I can see that his maid works all day long. I asked her, are there so many chores even in a house?

Source: economicshelp

(2) Minimise production costs. Perhaps this is the main argument. Most of them are overworked, & yet receive only a fraction of what the locals receive here. An Indian workers receive a meagre RM400 (about $110 or £80) a month, a third of what the local counterparts receive. A Myanmar worker who is a kitchen helper & also a waiter receives higher, at RM 1000 ($275 or £200) a month but still underpaid compared to locals. As for locals, they often shunned away from these types of jobs, after complaining about the pay & long working hours. Most locals have very bad attitude, they come to work late & leave early. Also the turnover is just too high by hiring locals. Once they found a new job, they will just move on

From supply side economics, employing immigrants can help to raise output in Malaysian economy & also since there is no wage-push inflation, employers can always reduce their production costs in restaurants, factories & construction sites. Therefore AS curve will shift rightward (refer diagram above)

Reasons not to employ foreign workers:

(1) Increase in local unemployment. Not all locals are unwilling to work for lower pay jobs. In fact there are many people who have been unemployed for a while or even inexperience working in a restaurant. Therefore they have no bargaining power. Sometimes it is those firms & restaurants that are unwilling to hire one. Excuse is often to slash production costs. For instance, if they can hire 2 foreign workers for the price of 1 & double their output, it doesn’t make any economic sense to employ locals at all

(2) Increase in crime rate. Many of those crimes such as robbery, breaking in or snatch theft are done by Indonesians. They become construction workers in the day & could do something else at night. For the sake of minimising costs, firms blindly employing them without knowing their background. They could be criminals running away from their home country. Also, clashes among foreign workers are common in Malaysia. For instance, Bangladeshi against Indonesian workers

(3) Not contributing to local consumption. Most of these workers, although low paid but are provided with hostel as well as free lunch & dinner, normally at the place where they work. Therefore salaries earned, are normally saved or remitted to their home country. As such, we say that they don’t contribute much for local consumption, which is also a driving force of economy