Coherent labour policy, please

If the policies on foreign labour are to make sense, then they need to be informed about what’s happening on the ground, and they must work in sync with the prevailing economic conditions.

ON MARCH 28, Nanyang Siang Pau front-paged a worrying piece of news, highlighting the fact that some 10,000 SMEs in the construction sector nationwide faced severe labour shortage with the latest ban on entry of new foreign labourers.

Many of these construction jobs are linked to the Government’s infrastructure projects, and if this labour issue is not resolved, then it would lead to delay in delivery and hit our already slowing economy.

Most SMEs — mainly sub-contractors — are paying thousands in overtime to their foreign labourers, with many clocking up to 16 hours per day.

These labourers, mostly Bangladeshis, were prepared to work overtime and forego their weekends or days off, to earn as much money as possible to repatriate their hard-earned money to an impoverished homeland, reported the Chinese newspaper.

As a result of this, a worker could easily earn several thousands now — far above the minimum wage stipulated by the Government.

While paying overtime keeps the problem of labour shortage manageable so that these SMEs can deliver their jobs on time, the measure is temporary at best. And it’s risky.

“The workers are people. They are made of flesh and blood. Working long hours could be unsafe for them,” Leong Kien Keong, vice-president of the Federation of Sub-constructors Association of Malaysia, told Nanyang.

Certainly, incidents of site accidents or deaths stemming from fatigue is real. Once accidents occur, employers will definitely suffer losses due to stop-work order and the necessity of investigations by the authorities.

As such, Leong is urging the Government to amend its new foreign labour policy and allow the construction sector to bring in new foreign workers so that the sector can deliver their jobs on time and the economy will not be hit by this labour policy.

The construction sector is also facing a shortage of trained people due to the Government’s policy of preventing foreign workers from staying for more than five years. When their five years are up, the labourers will move to Singapore or other countries in search of greener pastures.

What this means in effect is that Malaysia, without realising it, has become the de facto training ground for foreign labourers for other countries.

This piece of news — which I have confirmed with Leong — carries two important points: 1) that policies on labour supply have failed to understand the needs on the ground, and 2) that policymakers have no real idea as to the economic strategies to be employed to combat the current downturn.

Indeed, Putrajaya’s decision on Feb 19 to freeze the intake of foreign workers presents risks to the country’s real GDP (gross development product) growth, which has been forecast at 4% to 4.5% this year, according to BMI Research.

The freeze would make it difficult for businesses to obtain cheap labour, and this will affect the manufacturing and agricultural sectors.

As for construction, the freeze could lead to job delays and higher building costs, and will likely undermine the Government’s own construction projects, the research outfit of Fitch said.

SMEs, which are already affected by the goods and services tax introduced last April, will likely face greater impact from higher labour costs due to their smaller profit margins.

Most of the country’s foreign workers are in the manufacturing sector (36.1%), followed by agriculture (23.5%) and construction (19.9%), according to BMI.

Indeed, recent news flow on foreign labour has not been comforting for businesses. The most startling measure was the one from the Home Ministry in late January to raise foreign labour levies by 100-300% and allowing the import of 1.5 million labourers from Bangladesh over the next three years.

After huge protests from almost all major trade and business groups, Putrajaya amended its decision. It imposed a total freeze on new foreign labour and an acceptable hike in levies for existing workers.

After reading the Nanyang news on the plight of 10,000 SMEs, I recalled a comment that CIMB’s Datuk Seri Nazir Razak made at The Star’s “Power Talks”.

He said the Malaysian economy was behind other Asean nations, and this was partly because the politicians “were busy dealing with other domestic issues”.

Malaysia, which used to be ahead of Indonesia and the Philippines in economic growth, will fall behind in GDP growth this year. These two nations, as well as Vietnam, are expected to post 6% growth, while Malaysia — lagging in reforms — can only hope for 4.5% or less.

It’s obvious to Nazir, the younger brother of the Prime Minister, that politicians, who are the key policymakers in the country, are not doing the right things for Malaysia to help the economy bounce back.

The message from this respected and outspoken banker is clear: With the country facing depressed crude oil prices, low exchange rate, uncertainty in external environment, slower economic growth, higher cost of living and production, and high debts, it’s high time for less politicking and more real work.

  • Ho Wah Foon is an associate editor at The Star.

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