Technology could reduce Malaysia's reliance on foreign labor

Technology can reduce Malaysia’s dependence on foreign workers

Technology can reduce Malaysia's dependence on foreign workersIn the last forty years, foreign workers have been very important to the growth of industries that need a lot of workers, like manufacturing and plantations. They often do jobs that locals would not do.

“Economically and socially, foreign workers play a significant role in Malaysia’s development,” Malaysian Employers Federation (MEF) president Syed Hussain Syed Husman said, according to FMT.

Based on statistics from the World Bank, Malaysia’s GDP could grow by as much as 1.1%. Only if there are 10% more manual or “low-skilled” migrants working there.

Some things, though, make this relationship no longer possible, Syed Hussain said.

He said that many foreign workers send money back to their home countries, which takes money away from Malaysia.

“This has resulted in substantial accumulation of foreign reserves in those countries,” he added.

In February 2022, MEF said that foreign workers were sending about RM34 billion annually through legal channels. If money sent through unofficial channels was also counted, that amount could have gone up to almost RM70 billion.

“It is estimated that foreign workers remit about 80% of their incomes back to their home countries,” Syed Hussain told FMT Business.

Protect foreign workers and make the ringgit stronger.

Malaysia might improve its global image and stay in business by fixing its migrant worker treatment. It might also become less reliant on foreign labor and see fewer people leave the country through transfers.

Geoffrey Williams, an economist at the Malaysia University of Science and Technology, said that Malaysia’s reliance on foreign workers is not a matter of necessity but of choice.

“Looking at remittances to home countries of foreign workers in this way is unwarranted and appears to be placing blame on innocent foreign workers who are simply doing their jobs,” he said.

“Malaysian companies opt for foreign workers simply due to their willingness to accept lower wages, substandard employment terms and conditions with no legal protection,” Williams said.

He said that businesses would have to rethink how they hire people and run their businesses. If the rights and pay of foreign workers were equal to those of local workers.

“Otherwise, their salaries would continue to lag behind those of Malaysians, making them more attractive to employers. Raising wages for foreign workers will reduce the demand for them.

“Another way to reduce the demand for foreign workers is to give them proper legal protection. This will stop errant companies from employing and abusing them,” he added.

Syed Hussain said the amount of ringgit that leaves the country depends on foreign worker pay and population.

“The amount remitted to the source countries will increase further in the event of any increase in the minimum wage rate. On average, foreign workers send back an additional RM4 billion for every RM100 increase in the minimum wage.

“In the long run, reducing dependence on foreign workers can help to minimize the outflow of the ringgit.

“By reducing remittances, we will be able to retain the money in the local economy, which will spur its growth,” Syed Hussain added.

The way forward is to combine technology.

A report from 2022 by the International Federation of Robots says that many countries have made big steps forward in advanced robots. These days, China, Japan, the US, South Korea, and Germany stand out as the stars in this field.

China has made great strides in industrial robotics by using its skills to make many things simultaneously.

In the eyes of the Chinese government, the robot industry is already ready for a “revolutionary leap”. That could be very important for the whole country’s growth.

From a cost-benefit point of view, many businesses in Malaysia have already started to improve their technological skills.

“The use of technology is crucial in reducing our dependence on foreign workers,” Syed Hussain said.

He said that automating tasks and processes can improve workers’ health and lower the risks of 3D jobs (dirty, dangerous, and difficult). Especially in industries like building, manufacturing, and plantation that foreign workers mostly fill.

For example, the national car company Proton has been able to lower its reliance on manual labor. It’s done by using technology to drive its manufacturing process.

Long-term, this has led to lower costs and more production capacity.

People aren’t needed as much to do routine jobs because of automation. Still, more skilled workers must run and fix complex machines and robots.

Syed Hussain said that the next step is to teach people how to use new technology to do their jobs better.

“Talent development is key to success given the need to continuously upskill and reskill employees to be more productive,” added Syed Hussain.

“TVET (technical and vocational education and training) must be made a mainstream focus to ensure that our workforce, particularly the youth, are adequately prepared for the demands of Industrial Revolution 4.0 (IR4.0),” he said.

He also said that colleges and universities play a big part in ensuring that their programs align with what the market wants. Which is by working with business partners and making people think of TVET jobs as high-skilled jobs that add value.

“Societal perception that 3D jobs are for migrant workers would be removed by rebranding and revamping these jobs to make way for clear career progression,” Syed Hussain said.

Abu Sofian Yaacob, a senior lecturer at Universiti Keusahawanan Koperasi Malaysia, said that using technology could be the best way for Malaysia to stop people from leaving and deal with a lack of workers.

He also said that Malaysia will move up the value chain and become more competitive globally by adopting technology.

“For Malaysia to fortify its position on the global stage, it is crucial to enhance our operational methodologies.

“The incorporation of advanced technologies can bring forth a myriad of benefits, ranging from heightened efficiencies to keeping a larger chunk of the nation’s wealth within its shores,” he added.


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