KL's labor clampdown

Employers in Malaysia cannot complain that they had no forewarning of the recent freeze in recruitment of unskilled foreign workers. It comes almost a year after Kuala Lumpur decided to stop approving new entry permits for foreign workers in the construction, manufacturing and service sectors.

Given that foreign workers account for close to 20 percent of the 8.05 million-strong workforce in 1996, the move was perhaps inevitable. Few countries have opened up their labor market this way.

For comparison, Taiwan, with also about 20 million people but a larger and more sophisticated industrial base, get by with a mere two percent foreign workforce.

Even so, Malaysian leaders now feel that employers, especially those in the manufacturing sector and hospitality trade, are abusing the system. Recent media reports of factory-owners sacking Malaysian workers to employ foreigners at lower wages may be anecdotal, but they are very probably indicative of the general ills in the industrial sector. There have also been reports that hotels prefer not to employ local staff.

Malaysian trade unionists claim that employer preferences have left 300,000 Malaysians unemployed at a time of acute labor shortage. They also note that employers prefer foreign workers because they work for up to 15 hours a day for less money. They also make no claims for medical benefits or workers' compensation. Obviously, Kuala Lumpur could not let this situation continue.

Significantly, the Malaysian government in May simplified procedures for expatriate professionals to apply for employment permits. The pressing need for more professionals, scientists and academics to work in the country has been recognized. Malaysia wants to move up the economic ladder; it can no longer afford to remain a platform for low-cost manufacturers.

-- Business Times, Singapore