Jan 4, 2017

Ramon: Time for Malaysia to cut dependence on cheap foreign labour


Ramon: Time for Malaysia to cut dependence on cheap foreign labour

KUALA LUMPUR: Malaysia’s economy is having a cold now, but it can turn into full-blown pneumonia if the country does not wean itself off its dependence on foreign workers, said prominent Malaysian economist Tan Sri Ramon Navaratnam.

Starting this year, the Government made new rulings under the Employer Mandatory Commitment (EMC), which dictates that companies be the ones to pay the levies for the foreign labour they bring in.

The move, which comes after nearly a year of negotiations, is meant to reduce the number of foreign workers being brought in by “middlemen” agents and to force Malaysian companies to adopt more humane employment practices in accordance with international labour laws.

The ruling has not sat kindly with employers. The Malaysian Employers Federation (MEF) claims it could cost the country’s economy RM5bil a year.

Ramon, who was Finance Ministry deputy secretary-general, however, said that this is medicine that employers need to swallow to avoid getting sicker.

“This economy cannot last. It is being sustained by cheap labour but before long we will be beaten by other countries and we will lose our advantage of building up our value chain and technology base.
“We are just having a cold now. If we neglect it, it could grow to become pneumonia and we will perish,” he said.

However, the Sunway Group corporate advisor also criticised the manner that EMC is being introduced, likening it to a high dosage of medicine being administered in too short a time.

He contends that the Government should have gradually increased the levy fees and weaned employers into paying for their workers instead of making a lump sum change all of a sudden.
“They should have had a plan to phase it out so people don’t feel so shocked,” he added.

The World Bank projected Malaysia’s growth to slow in 2017, saying that while labour has been the main driver of its economy for the last two decades, it can no longer sustain the country’s growth.

“As capital and labour are expected to slow down, rising productivity, greater female labour-force participation, and continued investment in physical and human capital will be necessary for Malaysia to achieve high-income status,” it said in a country report.

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