BIZ-EMPLOYMENT: KUALA LUMPUR- Wages in Malaysia too low to attract local workers

Picture for representational purpose only. — AFP


AT a more attractive level of wages, Malaysian workers would not shun “dirty, dangerous and difficult” (3D) jobs, according to an article “Low-skilled foreign workers’ distortions to the economy” by Bank Negara Malaysia.

“Much has been said about the reluctance of local workers in undertaking 3D jobs. While cultural factors and the inherent nature of the work do play a role in deterring local involvement, it may also be argued that it is partly due to local wage conditions,” the article said.

It said of the 200,000 daily commuters from Malaysia to Singapore, it was found that 40% were working in mid- to low-skilled jobs, motivated mainly by higher wages.

This includes occupations that are often avoided in Malaysia such as plant and machine operators and assemblers, cleaners and labourers.

“While this is a limited example, it does suggest that current wages in Malaysia may be too low to attract local workers. Employers may also be reluctant to increase them due to the presence and abundance of cheaper alternatives.

“So long as blue-collar wages continue to face downward pressures, employers will not be hard pressed to adopt productivity-enhancing measures. Consequently, Malaysia risks being trapped in a low-wage, low-skill conundrum.”

The article said a high-dependence on low-skilled foreign workers will weaken the case for automation, suppress overall wages, and deter adoption of productivity-enhancing efforts, hindering the creation of high-skilled jobs and adversely shapes Malaysia’s reputation as a low-skilled, labour-intensive investment destination.

Foreign workers remit a significant share of their income abroad, thus reducing spillovers in the domestic economy.

Total outward remittances in 2017 remain sizeable at RM35.3 billion, of which the bulk was accounted for by foreign workers.

“While grants and incentives for automation and technology adoption are helpful, they are by themselves insufficient to create the necessary push for firms to move up the value-chain.”

It said Malaysia’s transition to a high-income and developed nation is at risk, as long as firms are still engaged on a “race to the bottom” in relation to labour costs and are unwilling to pay more, despite commensurable productivity gains they had adjusted.

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