PETALING JAYA,Feb 24: Two economists are calling for a review of migrant worker policies that will result in a gain of top talents from other countries and a reduction in the import of unskilled labour.

Yeah Kim Leng of Sunway University and Madeline Berma of the Malaysian Academy of Sciences said Malaysia was still too dependent on cheap foreign labour and that this was depriving citizens of jobs and decent wages.

Citing findings by the World Bank, Yeah told FMT that wages for skilled jobs in the country had remained suppressed and graduate unemployment and underemployment were high.

“It is widely recognised that easy access to cheap foreign labour, while beneficial to output growth in the short-term, retards structural upgrading, automation and technology shifts in the long-term,” he said.

“This is particularly the case if aggressive policies are not in place to accelerate the structural transformation to higher value, skills and technology-based industrial and commercial activities.

“We should emulate countries such as the US, Australia and Singapore, which employ skilled migration policies successfully to attract top talents from all over the world while discouraging the intake of unskilled foreign workers.”

Berma told FMT of the need to transition to a digital economy driven by knowledge and digital tech.

She said the use of cheap labour would continue to suppress workers’ wages and discourage innovation, skill acquisition and education incentives for Malaysians.

“Foreign workers hamper productivity and technological development due to the substitution of unskilled labour for technology,” she said.

“Malaysia should hire only skilled foreign workers.”

They were commenting on former finance minister Daim Zainuddin’s call for the government to muster the political will to stop employers from exploiting cheap labour, saying it generally did not benefit Malaysians.

Laurence Todd of the Institute for Democracy and Economic Affairs spoke of the need for greater financial support for digitalisation efforts, particularly for small and medium enterprises (SMEs).

“Many of the government’s digitalisation grants are skewed towards flashy, high-tech projects when we actually need to see more day-to-day innovation and upgrading in our SMEs,” he told FMT.

“Talent is also crucial. Having a large pool of industry-ready graduates is perhaps the number one issue raised by industry.

“For this, I think we can look to Germany, an advanced economy that has retained a large manufacturing sector by focusing on vocational education and integration of education and industry through apprenticeships.”

He said Putrajaya should focus on ensuring efficient regulation of foreign labour instead of imposing restrictions that would be difficult to enforce.

Yeah agreed, saying Malaysia should emulate oil-rich Gulf states and Singapore in managing its foreign labour in a highly controlled manner.


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