Foreign Labour Policy and Employment in Manufacturing

The Case of Malaysia

Bibliographic Data

ID4775742
AuthorsEvelyn Shyamala Devadason (0000-0003-0697-0190, University of Malaya, corresponding author)
Year2021
Volume51
Issue3
Pages398-418
Publication date2021-05-27
Peer ReviewedYes
Open AccessNo
TypeARTICLE
VenueJournal of Contemporary Asia (JOURNAL)
Journal identifiersISSN: 0047-2336 • E-ISSN: 1752-7554
PublisherInforma UK Limited (PUBLISHER • GB)
DOI10.1080/00472336.2020.1759675
OpenAlexW3024337865
LanguageEN
Citations received2
References cited14

The over-dependence of Malaysian manufacturing on unskilled foreign workers suggests the lack of policy alignment with the needs of the labour market. Despite the use of "price restrictions" (foreign worker levy and minimum wage) to control the demand for foreign labour, there are few indications of policy instruments having influenced the foreign employment growth rate. This article estimates industry-level foreign employment, paying attention to the roles of levy system, recruitment system and minimum wage policy, to provide a perspective on labour market administration. Using a panel data set of manufacturing industries for 1985–2014, upward revisions in the levy over the 1990s were found to be significant deterrents to the growth rates of foreign employment. The increase in levy in 2005 however failed to reduce this growth as it came in direct conflict with the introduction of outsourcing of foreign workers. The article suggests that with better policy co-ordination with supply-side instruments, a levy is a desirable instrument to align immigration with the objective of reducing foreign worker dependency. To appropriately price labour market needs, strict enforcement of levy payments by employers is recommended along with a fine-tuning for the existing levy to make it a multi-tier levy system for Malaysia

Business · Economics · Enforcement · Immigration · Labour economics · Outsourcing · Payment · Wage · Finance · Labor Movements and Unions · Migration and Labor Dynamics · Migration, Ethnicity, and Economy

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