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MOF: Industries to shift towards high tech, and high-skilled labour to reduce foreign labour dependency

MOF: Industries to shift towards high tech, and high-skilled labour to reduce foreign labour dependency

29 Oct 2021

Industries are to shift towards high technologies and high-skilled labour to reduce dependency on foreign workers, the Ministry of Finance (MoF) said.

“As skills and expertise are needed for technology adoption and application, the affected sectors need to invest in upskilling and reskilling initiatives to increase their workers’ productivity and sectors’ performance,” the ministry said in its Economic Report 2021/2022.

“Before the Covid-19 pandemic, numerous concerns on the nation’s heavy reliance on unskilled and low-skilled foreign workers were raised. Generally, Malaysians’ reluctance to take up jobs [maligned as] 3D (dirty, dangerous and difficult) resulted in the monopolisation of foreign workers in specific sectors.

“Many foreign workers operate in labour-intensive industries such as manufacturing, construction, plantation, agriculture and in the domestic sector,” said MoF.

The ministry explained that with the implementation of Movement Control Orders (MCOs), suspension and restriction on numerous economic activities had reduced the number of on-site workers, resulting in high retrenchment rates especially among foreign workers.

In addition, Putrajaya’s instruction to send foreign workers to their home country and tighten foreign entry into Malaysia during the pandemic contributed to the labour shortage, namely in the agriculture and construction sectors, leading to a sharp decline in GDP growth and labour productivity in 2020, MOF said.

According to the Construction Industry Development Board, the construction sector contracted by 19.4% in 2020, as the value of construction projects awarded declined by 22.6% to RM86.7 billion from RM112 billion the year before.

Consequently, labour productivity in the sector fell by 15.7% in 2020, MOF said, adding that labour productivity in the agriculture sector dropped by 1.8% in 2020, as its growth contracted by 2.2%.

Meanwhile, the Malaysian Employers Federation reported a shortage of 40,000 workers in the plantation industry, resulting in losses of RM10 billion in the same period, despite the 26% price hike in palm oil prices in 2020.

“Low utilisation of technologies in the construction sector, high dependency on tourist arrivals and tourism receipts, and individuals’ lack of savings were among other key issues within industries and individuals identified during the pandemic,” said MOF.

Source: The Edge Markets