Analysis: How Malaysia’s Eased Rules On Foreign Workers’ Hiring Impact Employers And The Economy - Article

What does this relaxation of rules mean for organisations in Malaysia as we continue into the new world of work? (E.g. challenges & opportunities)

Following a meeting on 10 January 2023, attended by ministers and senior officials from ministries and agencies directly involved in the management of foreign workers (including the Human Resources Ministry), this decision aims to facilitate the entry of foreign workers to drive Malaysia's economic growth in 2023, particularly in Q1 2023. According to Minister of Home Affairs Datuk Seri Saifuddin Nasution Ismail, Malaysia will be temporarily easing its rules on hiring foreign workers in the first quarter of 2023. It is estimated that the national economy will increase by 1% of the Gross Domestic Product (GDP) if the influx of foreign workers is accelerated to meet the needs of related sectors. (Source: Human Resources Online)

This decision is most welcomed by SDB as various sectors including the property and construction industries had faced workers shortage, especially during the COVID-19 movement restriction period. The challenge of hiring workers continues in the post-pandemic period, particularly with low-paying jobs. This was a segment that was mainly filled by foreign workers – so it is not like the interest in these jobs has dropped, rather a whole segment of the foreign workforce was no longer here. During the height of the COVID-19 pandemic, a number of foreign workers had left Malaysia. Many had returned to their families, while some had faced trouble getting approval to return to Malaysia.

Companies, especially during pre-pandemic times, tend to hire foreign workers as many locals were reluctant to take on what is perceived as low-wage, manual jobs. The lack of attraction to these jobs has always been there, hence the need to hire foreigners to fill up these positions. Due to the shortage and difficulty faced in getting foreign workers, companies have tried to advertise these jobs to locals. Solutions include looking at temporary workers instead of full-time, accepting higher turnover from contingent workers as they move on to further their studies, or to other jobs, and to automating their operations – such as how some fast-food chains and plantation companies are embarking on.

However, there are challenges. Our observation is that, during the pandemic, employees gained a new perspective on work. Now, employees are looking for jobs from companies with a great culture. They want a job that gives them more flexibility, in a company that looks out for their well-being, and provide career advancement opportunities, as well as rewards and recognition. More importantly, they also want a job that offers them better compensation and benefits. In a related manner, the gig economy, emerging technologies and emerging trends have also disrupted the employment market, especially for jobs that are considered as low paying.

For example, people who were previously in the RM2k per month wage bracket can also now earn just as much – if not more – from working as ride-sharing drivers. Ride-sharing drivers transport people where they need to go, or they may pick up and deliver food orders. What makes this work appealing is the flexible work location and hours, with the straightforward objective of getting from one location to another in a timely fashion. They are also able to choose the areas and time they want to work in – and do not have bosses to report to. Against this scenario, companies - including those in the property development, hospitality and construction industries - face difficulties in filling up job positions that are considered as low-paying jobs.

What are some skills gaps that can potentially be bridged with the hiring of more foreign workers?

Some of the gaps that can be addressed through foreign workers include technical skills especially from foreign workers with specialised technical skills, such as engineering or IT; Language skills from foreign workers who speak multiple languages to communicate with a diverse range of stakeholders; To address the shortage of workers in certain industries that are facing shortages of local workers, such as agriculture and construction, in which foreign workers can help to fill the gap.

At the same time, employers today need a world-class workforce. To address this, it requires recruiting from non-traditional labour pools, by providing training, and collaborating with educational and training institutions to improve graduate employability, as well as hiring foreign talents or locals who have overseas working experience. For example, our hospitality arm – Hotel Maya in Kuala Lumpur across KLCC – is spearheaded by our GM who has vast experience working overseas, including in Singapore.

As a result, she has brought in numerous ‘best global practices’ to the hotel and implemented processes that had resulted in greater productivity, efficiencies and higher guest satisfaction levels.

How can organisations strike the right balance between upkeeping their local workforce, and bringing in foreign workers to meet business needs?

We believe that the term 'glocalisation' (globalisation + localisation) is being brought to life in an increasingly competitive economy. In property development, the developer could outsource, say, the architecture aspects to world-renowned architects which may be more experienced, talented and have a global view of the architectural scene. Once the blueprint is set, the local team could then take it on, and build accordingly given their knowledge and expertise of the local environment.