Impact of the Economic Crisis on International Migration in Asia: Country Report for Malaysia

ASSESSING THE IMPACT OF THE GLOBAL ECONOMIC CRISIS ON INTERNATIONAL MIGRATION IN ASIA: FINDINGS FROM THE MISA PROJECT Ortigas Center, Manila, Philippines, 6 May 2010

Vijayakumari Kanapathy Independent Consultant

Outline of Presentation
Overview of Recent Economic Developments Measures to Reduce Foreign Labour Data on Foreign Labour Agencies Providing Services to Foreign Labour

Overview of the Malaysian Economy

Overview of the Malaysian Economy

Overview of the Malaysian Economy

Table 1
Malaysia: Principal Economic Indicators, 2006-2010 2006 5.8 3.6 11,545 2.2 11,159 2.2 3.3 15,360 834,675 119,135 2007 6.3 2.0 11,775 2.0 11,398 2.0 3.2 14,035 825,182 131928 2008 4.6 5.4 11,968 1.6 11,577 1.6 3.3 13,851 1,058,980 178,621 2009e -1.7 1.3 12,061 0.8 11,585 0.07 3.9 25,064 1,546,347 369,799 2010f 5.0 4.0 GDP (%) CPI (%) Labour Force (000) Change in Labour Force (%) Total Employed (000) Change in Employment (%) Unemployment Rate (%) Retrenchment (nos.)* New Vacancies (nos.)+ Registered Job-Seekers (nos.)

Key Economic Issues

Weak medium to longer-term growth prospects Middle-income economy trap low-VA, low-wage, low-productivity structure New Economic Development Strategy Tenth Malaysian Plan 2011-2015 New Economic Model

New Economic Model (NEM)

More market driven - amend social & economic polices that deter competition & growth Transform Malaysia into a high-income economy Shift reliance from low VA mfg base to high technology & modern services that employ skilled & highly paid workers NEM has important implications on ILM Low-skilled FL dependency to drive growth has led to low-skill, low-wage equilibrium

Measures to Reduce Foreign Labour Dependency (2008)

Termination of foreign workers first Temporary freeze revoked, work permits issued on a case-by-case basis; 98,916 new work permits issued as of March 11 2010 Freeze intake of workers from Bangladesh Fast-track the deportation of undocumented migrants 7,009 operations carried out Number of arrests 47,310

Measures to Reduce Foreign Labour Dependency (2008)

Regularize undocumented workers Special amnesty granted to undocumented workers in Sabah 610,614 foreigners Foreign worker levy reduced by 50% Measures to reduce foreign labour dependency Encourage self-service in selected sectors & IBS in construction, esp. in govt. projects

Measures to Reduce Foreign Labour Dependency (2009)

Levy to be borne by employer Apr 2009 Doubling of levy policy revoked A new quota system was introduced:
1 local: 2 FW for export mfg 1 local: 1 FW for all other sectors

Restrictions on Outsourcing Companies Workers brought in must have jobs Allowing refugees to work About 90,000 refugees

Measures to Reduce Foreign Labour Dependency (2009)

Encouraging local job-seekers to take on jobs usually held foreigners Introducing minimum wages by sector Peoples Volunteer Corp to engage as security guards Five-Year Ceiling on Foreign Workers Only those with certified skills rehired

Measures to Reduce Foreign Labour Dependency (2009)

Coordinate & Streamline FW Policies Committee (14 Mins & 11 depts) to address 4 areas:
Legislation 2) Entry procedures 3) Monitoring & information system 4) Enforcement
1)

Reduce foreign workers from 1.8 million to 1.5 million within 3 years

Data on Labour Migration

In-migration: Low-skill workers Fell from 2.1 million in 2008 to 1.8 million in 2009 Estimate of undocumented workers 1.5 million Foreign labour dependency is 3.6 million or31% of total employed

Data on Labour Migration

In-migration: High-skill workers 33,601 Mainly from India (18.8%) & China (8.6%) Mainly employed in services sector (70.7%)

Data on Labour Migration

Number of emigrants: 2007 139,696 Mar 2008 to Aug 2009 304,358 40 % bound for Singapore Return Migration Additional incentives granted 15% tax on employment income for those employed in South Region Corridor in selected sectors

Remittances
Remittances by Foreign Labour, 2008 & 2009 (Ringgit million) 2006 Expatriates 5,313 2007 5,972 2008 5,152 2009* 4,062

Low and semi-skilled 17,889 17,187 18,905 15,760 labour Total 23,202 23,159 24,057 19,822 As a % of GDP at 4.0 3.6 3.3 purchasers value Note: * Jan to Sept 2009 Source: Bank Negara Malaysia, Monthly Statistical Bulletin, January 2010

Agencies Providing FW Services

Some embassies provide assistance beyond visa/work related matters, eg Philippines, Bangladesh & Indonesia Conciliation services Counselling & advisory services on legal & technical matters Skills training programmes Shelter

Agencies Providing FW Services

NGOs not exclusively migrant-focused Counselling & legal aid Advocacy & education Shelter Trade Union MTUC Advocacy activities Two fulltime employers to assist DFWs