Employment Of Foreign Workers In Malaysia

INDEX

1. Executive Summary 2. Introduction 3. Analysis 4. Challenges 5. Implications 6. Recommendations 7. Conclusion 8. References

1.0 Executive Summary
The report investigates on the issue of employment of foreign workers in Malaysia. During the British colonial period in the early nineteenth century, Malaysia was a net receiver of foreign nationals who came to work in the plantations, mines, and construction sectors. Nowadays, rapid industrialization, urbanization, strong economic growth led to labour shortages in rural areas and plantation sectors due to rejection of locals to work in these industries. There are some changes and policy reforms since early 2000 regarding the employment of foreign workers, which includes: Amendments to the Employment Act and Equality in Treatment and Enforcement of Laws. There is also a proposel regarding Foreign Workers Act.
The report analyses the advantages and disadvantages of employing foreign workers. Among the advantages are availability of low cost labour, willingness to work for long hours and availability of abundant foreign workforce. Nonetheless, there are also drawbacks to employing foreign workers including rapid expansion of population and increasing in level of unemployment of locals. The main issue is exploitation of foreign worker in Malaysia. Foreign workers are exploited by their employers in different ways, for instance, wage manipulation, unreasonable working hours and conditions, and physical and verbal abuse.
The challenges in hiring foreign workers evolve around issues of manpower, social issues, currency outflows, etc. Employment of foreign workers brings implication on Malaysia and its businesses. Implication on Malaysia includes downgrade of Malaysia’s reputation, loss of Malaysian talent and no improvement in Malaysian worker’s wage and welfare while the implication on businesses is that the restrictions on employment of foreign workers affect their productivity.
Facing the challenges and problems of hiring foreign workers in Malaysia, some recommendations are proposed. There are several laws in Malaysia that is applicable to foreign workers to ensure equality and equal treatment. Several recommendations are proposed regarding issues such as influx of foreign worker into Malaysia with or without documents, over dependency on foreign worker and exploitation of foreign worker. Foreign worker have been of great assistance in overcoming the labour shortage in Malaysian market. The government could minimized the negative impact by imposing levies, strengthening governance factor and migrating policies, diversifying source of labour, and eliminating undocumented worker. 2.0 Introduction
During the British colonial period in the early nineteenth century, Malaysia was a net receiver of foreign nationals, particularly from Indonesia, India and China, who came to work in the plantations, mines, and construction sectors. During the industrial transformations of the 1980s and the early 1990s, Malaysia shifted toward export-oriented industrialization. This was supported by a significant number of low-skilled foreign workers that were imported. According to the Immigration Department, as at Aug 31, 2012 , there are 2.8 million legal and illegal foreign worker in Malaysia. Irregular Foreigners By Citizenship |
Foreign workers come to Malaysia mainly from Indonesia, Nepal and Bangladesh. Other countries where workers come from are the Philippines, India, Vietnam, Pakistan, Thailand, China, and Sri Lanka but their total numbers are low compared to the other leading groups. The large inflow of foreign workers into Sabah and Sarawak from neighbouring countries is largely due to political and economic factors in their own countries. The employment of foreign workers has been concentrated within the agriculture, construction and manufacturing sectors. The utilization of foreign labour in Sabah and Sarawak differs in important respects from the Peninsula. For instance, in the Peninsula the largest numbers of foreigners are employed in the manufacturing sector. In Sabah and Sarawak, the plantation sector takes the lead. There are some skilled foreign workers in Sabah and Sarawak as well, but they are generally medical officers, teaching professionals, and expatriates attached to the larger corporations. Skilled labour in the Peninsula, though small in proportion to the foreign labour force, is also growing in the skilled services sub-sectors. 3.1 Expansion of Foreign Worker
Rapid industrialization, urbanization, strong economic growth give the impact of movement people to urban areas led to a labour shortages in rural areas and plantation sectors. Also, Malaysians rapidly increased their education levels and rejected jobs in agriculture and construction. Higher educated women joined the labour force and needed the services of domestic household workers. Political instability in neighbouring countries also created an incentive for people to come to Malaysia as asylum seekers, regular or irregular workers. Lastly, comparatively slower growth in neighbouring countries, including low wages and high unemployment, makes Malaysia an appealing destination labour market.
Distinct from most other destination countries in the world, foreign workers in Malaysia are older than workers from the Malaysian population. This is because most immigrant workers around the world are between the ages of 15 and 35. The age range is low because those are the ages for risk-taking and higher income potential. However, in Malaysia, the local population is young and foreigners tend to be older. For example, almost 40% of foreigners and only 25% of the Malaysian population are between 30 and 40 years of age, respectively. This might be because most foreign workers stay in Malaysia for extended periods, despite the fact that the visas issued are for relatively short terms. Second, most foreigners work in low-income and low-skilled sectors such as agriculture and construction. Living in Malaysia provides significant economic gains to foreigners compared to what they would earn in their home countries, working in similar physically demanding occupations. Thus, there is more of an incentive for foreigners to stay in Malaysia as they get older. Figure below shows a reduction in the share of young foreigners and an increase in the share of older immigrants, especially age 35 and up, over the last two decades. Age distribution of foreign worker 1990 - 2010 |

3.2 Recent Changes and Policy Reforms (2000s–Present) 3.3.1 Amendments to the Employment Act 1955
The Employment Act is applicable to both local and foreign workers. A Special Pass was put in place to allow foreign workers with standing complaints against their employers to stay on in Malaysia while they waited for their cases to be heard. Although the Employment Act (EA) advocates equal treatment for all workers, the enforcement of the legal rights of foreign workers is seen to be weak in Malaysia. Many foreign workers are reluctant to complain against their employers even when they are made aware of their rights. The DOI put in place a provision for a Special Pass to be issued to migrant workers who have pending complaints against the employers at MOHR or while waiting for their cases to be heard by the relevant authorities. 3.3.2 Equality in Treatment and Enforcement of Laws
The laws, as written, extend equal protection and treatment to local and foreign workers. However, the application of the law remains unequal. Some of the provisions outlined in the specified labour legislations, such as the Employment Act 1955, Workmen’s Compensation Act 1952, Industrial Relations Act 1967, and Trade Unions Act 1959, though having adequate protection for local workers, do not extend the same protection to foreign workers in reality. So, the treatment should be fair in terms of health and safety, unlawful deduction of wages, and issues of unfair dismissal.
Malaysia is a signatory of international conventions to protect the rights of all people, including immigrants. Malaysia is a signatory to the UN Convention on Elimination of Discrimination Against Women (CEDAW), the UN Convention on the Rights of the Child (CRC), and has ratified five of the eight core ILO Conventions. Malaysia is also a member of the UN Human Rights Council. It is also a signatory to the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers, adopted by ASEAN in January 2007. Article 8 of the ASEAN Declaration on the Protection and Promotion of the Rights of Migrant Workers states that governments shall “promote fair and appropriate employment protection, payment of wages, and adequate access to decent working and living conditions for migrant workers.” Thus, as a signatory, Malaysia is bound to abide by these international conventions. 3.3.3 Proposed Foreign Workers Act
There is no comprehensive law or agency that deals with foreign workers’ affairs. Thus, a Foreign Workers Act is being considered so that there is a singular law to establish and address all aspects relating to foreign labour. The Minister responsible for the Law has recently (May 2012) announced that the Government is exploring the possibility of enacting a Foreign Workers Act to manage the four million migrant workers in Malaysia as they make up a large share of the country’s population and policies can no longer be made ad-hoc as and when they crop up. The Minister has proposed to study the experience of other countries. Currently, no further information is available on the proposed Act and it is unclear whether the Minister was referring to the previously drafted legislation or if the Government is tackling the proposal freshly.

3.0 Analysis
Presently, the country’s healthy economic situation provides many job opportunities to the people. This situation has attracted many foreigners to seek employment and it was found that 20% of the jobs are being occupied by foreign workers. As of August 2012, Malaysia has approximately 2.8 million foreign workers spread across sectors such as manufacturing (39%), construction (19%), plantation (14%), housemaids (12%), and services (10%), with the other in agriculture (Immigration Department). The contributing countries by rank are Indonesia (50.9%), Bangladesh (17.4%), Nepal (9.7%), Myanmar (7.8%), India (6.3%), and the rest from Vietnam.
Interestingly, as a share of an entire economic sector, foreigners make up the largest share of workers in the wood-manufacturing sub-sector. With the exception of the relatively rapid decline in the share of agricultural employment, other sectors are more stable in terms of the shares that foreigners occupy. This is especially true for service sectors that employ relatively more unskilled workers and are spread across the country. Higher technology, higher skilled intensive manufacturing and service sectors are not significant employers of foreigners given that they often require specialized skills that typical foreign workers do not have.
There are many factors that influence the increase in numbers of foreign workers in Malaysia. The main factors that influence the increase in numbers of foreign workers are the travel policy which does not restrict the movement of foreign workers, poor control due to the large number of foreign workers and the weak enforcement by the authorities. Also, this might be due to unethical and non-transparent practices by the authority and the practice of current economic policy namely ‘borderless world’ which motivates outsider to come to Malaysia legally or illegally. In addition, some workers agencies and employers were really into making money out of the work permits lope holes instead of looking at the foreign workers supply and demand figures.
Furthermore, a different attitude and working conditions between the foreign workers and the locals also encourage increasing number of foreign worker in this country. The foreign workers were not choosy in carrying out the type of work they were told to do as compared to the local workers. Foreign workers do not question their employers regarding their salary. Foreign workers are less bothered about their welfare or the facilities provided to them by their employers. Foreign workers were disciplined on site. This finding simply showed that foreign workers were preferred over local workers by the employers.

Based on previous study that stated the main reasons the employers were prone to recruit foreign workers is because locals are not interested to work as labour, foreign workers were given low salary, when hiring foreigners compliance to the labour requirements are minimum, the foreign workers were normally hardworking, and the employers were able to reap hefty profit.

4.3 Advantages and Disadvantages of employing foreign worker
Employing foreign worker brings several advantages to our country such as: 4.4.4 Low cost labour
Hiring foreign workers can cut down the cost of hiring labour and employers can hire more labour with same amount of capital. According to A.H.M Zehadul Karim et.al. (1999), the uncontrolled presences of foreign labours play a significant role in maintaining the lower wages level where foreign workers often accepted lower wages than Malaysians. Thus, the lower wages also become the factor why the contractors hired these foreign labours because it will minimize the contractors’ expenditure. 4.4.5 Willingness to work for long hours
Foreign workers are able to work for long hours to earn extra income for their family. Constructions Industry Development Board (CIDB) considers the standard working week to be 44 hours and working in excess of 44 hours is considered as working overtime. Foreign workers are willing to works in exceed working hours compared to the local workers. Local workers are not being able to works overtime unless they are paid with extra wages. Usually, foreign workers are paid in lower wages even though they work for extra hours. 4.4.6 Availability of abundant foreign workforce
Former Minister of Human Resources, Datuk Seri Dr Fong Chan Onn said that Malaysia currently has about 1.8 million foreign workers and at the same time, local employers are submitting a large number of applications monthly to the Home Affairs Ministry to employ more foreign workers (Bernama, 2006). Therefore, it shows that it is easy for employer to bring in foreign workers into the industry. Most of the reason, it is happened because there are highly demand for local workers in the industry since local citizens are not interested to work in this field. Thus, it can avoid country from facing shortage of human capital. Due to that problem, hiring foreign worker is the best solution that country can take to remain competitive in the world market.

Nonetheless, employment of foreign workers also can contribute negatively to our country, among the disadvantages of hiring foreign workers includes: 4.4.7 Rapid expansion of population
Number of foreign labour is increasing everyday specifically from India, Pakistan, Bangladesh and Indonesia. In the Population Census 1991, foreigners account for 4.4% of the Malaysian population of over 18.3 million. By 2000, the alien population increased to over 1.384 million or 5.9%. The census figures on foreign nationals are understated as it is well known that, many of the illegal residing in the country at the time of the census refrained from enumeration for fear of being identified and deported. 4.4.8 Increase in local’s level of unemployment
As employers prefer to hire foreign worker, unemployment and reduction of employment opportunity for the locals happens, especially among high-skilled workers.

4.4 Main Issue : Exploitation of foreign worker in Malaysia
Drawn by the promises of jobs in Malaysia, thousands of men and women travel there every year from Bangladesh, India, Indonesia, Nepal, Vietnam and other countries in the region. Once they arrive, many work for 12 hours each day or longer, often in unsafe conditions, sometimes enduring physical and verbal abuse from their employers. Many do not receive the wages they were promised in their home countries. The government of Malaysia has a responsibility to prevent such abuses, nevertheless, too often the state fails to do so.
Foreign workers come to Malaysia to escape poverty and to provide for their families. However, many workers toil in conditions that amount to labour exploitation. They may not be paid for months of work or are left with no money each month after paying their employers the monthly charge for their work permit renewal, wage deductions for mistakes, and charges for food and rent. Most foreign workers work for long hours, including extra hours for which they are not paid. Verbal and physical abuse is common among foreign workers, women are sometimes subjected to sexual harassment and assault, including rape. Many workers operate hazardous equipment or handle dangerous chemicals, often without protective gear or guidance on how to protect them. When they had accidents at work, their employers may refuse to pay for their care and in some instances pressure them to return to their home countries. 4.5.9 Wage Manipulation
Many workers reported that their Malaysian agents and employers immediately began to deduct the cost of their work permits from their salaries, usually in monthly instalments known as levies. Nearly all of these workers had already paid for their work permits in their home countries, meaning that they were paying twice for the same permits. To most workers, these extra expenses come as a surprise.
In a typical account, Arvind, a farm worker, told Amnesty International that his Malaysian agent “said the Nepali agent had not paid yet, and they are taking that money from our salary now. It was around 2,000 ringgit [$585] they took from our salary. They cut a little from our salary for three or four months. “From the first salary, they started cutting 200 ringgit [$58],” said another Nepali worker, 28. “When we left Nepal, when I paid the agent 5,000 ringgit [$1,460], they said the work permit would be 350 ringgit [$100]. But once we were here, everything changed.” 4.5.10 Unreasonable working hours and conditions
Working in long hours with few breaks, performing backbreaking labour or remaining on their feet the entire time, beginning very early in the morning or working until very late at night. Often, they must work every day of the week. “The work conditions at the factory are hard,” said a 30-year-old Indonesian woman who worked at an electronics assembly plant. She explained:
I must stand for between eight to 12 hours a day when working. This can sometimes go up to about 16 hours. It gets very tiring. Since we work in a line, we are not allowed to take toilet breaks. We do get short breaks to rest three times a day, which are the only opportunities to use the toilet. . . . I remember how one of the line leaders was badly scolded once for using the toilet outside of the break time. 4.5.11 Physical and verbal abuse
Employers subject their workers to verbal or physical abuse. In particular, many women reported that they endure such abuse on a regular basis.
Kristina, from Indonesia, reported that her employer’s mother would beat her when her work did not meet with the woman’s satisfaction. “She pushed my head against the wall, and she hit me. My nose was bleeding from where she pushed me against the wall. I didn’t get beat that often, but it was more than just once. I called the agency, and they told me that after one week it would be okay.” Eventually the beatings were severe enough that she feared for her life. “She grabbed me, beat me, and kicked me. After that, I ran away.” 4.5.12 Unsafe working conditions
Most employers, including those in agriculture, construction, manufacturing, and restaurants, are required by Malaysian law to maintain a safe working environment, and Malaysia has made international commitments to provide a system of labour inspection. Factory workers who must work with or around chemicals often reported that they did not receive adequate safety equipment or training. Phuc, a 20-year-old Vietnamese man, gave this account:
While working, I have to handle dangerous chemicals, and the company does not provide me with any safety equipment. We have to use a chemical called “makeup” that makes our breathing difficult. This chemical is used to clean the machine when dirty or when it does not work well. I also have to use it daily to lubricate the machine that I work with. The smell of the chemical makes me feel ill and gives me a headache. Normally after work I feel very tired and sick. I also feel very ill at night after going to bed. It also makes the food I eat taste very bitter. I also have difficulty breathing after using it. I normally feel very ill like this about three or four times a month. I usually feel more ill when the machine gets spoiled and we have to clean the machine with the chemical. This happens to all the workers who use this machine. There are 20 of us, including three local workers. Most of us do not get masks, as there are usually only about two available. My co-workers have tried to ask the employer for more masks, but he told us that the two masks provided were more than enough. I therefore have not bothered to personally ask for more masks. I don’t think it will make any difference. 4.5.13 Living conditions
Many workers, who were employed in the manufacturing, construction, and plantation sectors, live in housing supplied by their employers. Malaysian law requires that such housing must be in a good state of repair and meet other basic standards, including free and adequate piped water and an adequate electrical supply.
Khaleel, a 25-year-old Bangladeshi factory worker in Kuala Lumpur, shared makeshift accommodation with nearly 50 other workers. “There is no water, so we have a pail that we use to collect water when the rain comes. We use this water from the rain for washing. We bring drinking water from the other side [of the factory compound]. We boil the water to drink,” he said. Mostafa, another Bangladeshi worker, said that 30 workers shared quarters near the factory in Klang where they worked. “It is like a shop block, maybe 40 feet by 19 feet,” he said. “Thirty people cannot be there, but we have to stay there. We sleep on the floor, one next to the other. 4.5.14 Accident and illness
By law, employers must compensate workers for most workplace injuries and should carry insurance that covers such injuries. In fact, employers often require workers to pay for their own medical care when they suffer accidents on the job. They are even less likely to pay for care for illness that is unconnected to workplace injuries. And when workers are disabled, through accidents or illness, some employers pressure them to return to their home countries, where the employer will not be held responsible for their care.
“One friend of mine had an accident,” Babar said, describing events that took place in early 2009. “He was working, and the forklift went back. The driver didn’t see him. He couldn’t move, and his left thigh was broken. He was taken to the hospital, and he had a cast put on him.” The workers took up a collection to pay for his medical care, which was about RM800 or RM900, the company did not pay. “This man, we took care of him. I used to feed him,” said Babar. After he had recovered enough to travel, the company sent him back to Bangladesh.

4.0 Challenges 5.5 Manpower (HR):
Manpower is one of the most challenging problems that is faced by Malaysian due to its large dependency of the foreign labour workforce. Based on the Malaysia economic report in 2012/2013, a total labour force of employment was about 12,645,700 while 768,800 were involved in construction sector. In addition, about 40% of more than 1.8 million legal foreign workers are working in the manufacturing sector, followed by construction (20 per cent), plantation (14 per cent), housemaids (12 per cent), services (10 per cent) and the rest in the agriculture sector (BTimes, July 5, 2010 ). More than half of them are Indonesian, while the rest are Bangladeshis, Nepalese, Burmese, Indians, Vietnamese and others. Thus, these foreign immigrants in Malaysia tend to bring their families over to Malaysia due to attractive gap of low unemployment rates and excessive demand of labour force in Malaysia. Instead of stimulating competition between the foreign workers and locals to get a job, the presence of these foreign workers has impacted to the stress of public amenities in Malaysia such as provision of health services, public and others (The Malaysian Insider, January 13, 2014.) Generally, the employer will choose foreign workers mainly due to the cheap wages compare to locals, and some of the company not even pay out EPF and SOCSO for them. Thus, the newly arrived foreign workers tend to accept lower wages and lower conditions where their salary is less than local workforces. It is believed that there is no actual shortage of manpower on locals, it was merely due to most employer who prefer foreign workers especially who came in illegally since they can be easily exploited as they have no recourse to law and justice.

5.6 Social issues:
There are various types of impacts on our economy especially social problems in society in Malaysia due to the employment of these foreign workers. People are starting to feel unsafe on this situation and they do start to worry that foreign workers will bringing in problems and criminal acts to our country. It does not matter whether the employment is legal or illegal. Foreign labour may create or cause some social problems and the impact will fall onto the locals such as spreading diseases, theft, robbery, cheating, and killing cases.
According to Police Chief Musa Hassan, 5000 crimes were committed by foreigners at year 2006 from a total of about 230,000 cases (Malaysian Trades Union Congress, February 26, 2007. Another recent bank robbery in Subang Jaya where a death of operations officer, Norazita Abu Talib, 37, who has been shot directly in the head by Indonesian security guard (The Star, October 23, 2013).
Although a total number of 2.1 million foreign have been successfully registered and been given a pass by the Immigration Department, according to Home Deputy Minister Datuk Wan Junaidi Tuanku Jaafar. However, the influx of illegal immigrants in the country has risen into1.3 million. (The sun daily, October 23, 2013) It also reported that a various operation launched in Sabah only has inspected a total 1821 illegal immigrants and the others 532 were detained.

5.7 Time consuming and costly:
The importation of legal foreign workers was time consuming and costly. According to Ministry of Home Affairs, the entire application process of working permit will normally took about two or three months. Moreover, due to a tight project completion, it is also costly in making a new application of working permit or to renew. Therefore, employers tend to employ illegal foreign labour in order to evade levies and other charges on them if they employ a legal foreign worker. Thus, at the end of this, the situation is worsen due to increasing amount of illegal foreign worker. Generally, employers can easily bring in foreign labour as long it complies with law and also there is unlimited supply of foreign labour. But due to cost conscious, they will prefer the one who is cheaper with necessary skills especially those who are hardworking and will comply with their working disciplines. Thus, this impacts on the local structure of wage and caused an intense competition with locals.

5.8 Currency outflows:
In term of economies, Malaysia faces challenges of currency outflow due to a high amount of remittances that has been sent out by foreign workers back to their home countries. This has causes an outflow of Ringgit currency to other country. Deputy Finance Minister Datuk Ahmad Maslan state that the remittances by legal foreign workers have doubled from RM10 billion in 2009 to RM20 billion last year. Bangladesh and Indonesia rank the top list of countries with the highest remittances at RM3 billion each, followed by Nepal (RM2 billion), India (RM625 million) and the Philippines (RM561 million) (The Malaysian Insider, November 11,2013). Although foreign labours do helps in rapidly growing sector like construction industry, which is always in shortage of manpower, it also relates an increase of inflation rate in Malaysia. For example, the price of goods is increasing in addition of increasing demand on goods. Moreover, the foreign workers are not paying any taxes and enjoy the benefits for free. Therefore, this may derail the country's plan to be a high income and a highly productive nation.

5.9 Quality:
Employer tend to fears that hiring a foreign trained abroad may revolve around the challenges of evaluating their education credentials, their language skills and their work experience (Postmedia News October 12, 2010). In developed countries such as Canada, there is a special expansion program that allows foreigners to work as interns in order to gain temporary work experience. Those programs are providing 29 internships within the immigration and human resources departments in order to ensure the quality of their worker. In an early fifth of Malaysia's, over 11 million workforce is foreign. Therefore, it is believed that an equal number of illegal foreigners are in the local employment market where these foreign workers perform both unskilled and semi-skilled jobs. In addition, The Malaysian Trades Union Congress (MTUC) in the Star News stated that the unskilled foreign labour in our workforce could be driving down the productivity levels.
A reported news in The Star Online, The foreign labour who make up 30% of Malaysia workforce are at disadvantage because they were employed in labour intensive industries while their counterparts is in other benchmark countries which involved in technology-based production. A MTUC secretary-general Abdul Halim Mansor quoted “Malaysian employers generally like to hire unskilled foreign labour because they are cheaper, while the big players are going for highly trained manpower for technology-based production. “We are only semi-technology-based. So, of course. they have higher productivity,” This shows that repeating unskilled work in a long hours may not mean quality work, but an investment of up skilling workforce will create both win-win situation in order to gain value added activities (The Star, April 17,2013).

5.0 Implications
Implictions for Malaysia: 6.10 Downgrade of Malaysia’s reputation
Malaysia’s are importing a large number of foreign workers either legally or illegally. The trafficking and exploitation of foreign workers are now the two major money spinners of government officials, traffickers and business people, but also negatively affecting Malaysia’s reputation. Malaysia was downgraded to Tier 3 (the lowest tier) by the US in its annual State Department’s Trafficking in Persons (TiP) report (FMT, 2014)

6.11 Loss of Malaysian talent.
There are hundreds of thousands of Malaysians now working abroad, particularly in Singapore. There are 1.3 million workers in the government service and the numbers is believed to be even higher if all government-linked companies (GLCs) and statutory bodies are included. A large number of Malaysians working abroad and in the public sector (doing ‘jobs’ few of us really know the economic value of), are clear indicators that Malaysia is not short on labour but is experiencing a surplus of labour instead. Malaysian workers are now ‘mismatched’ in their own country due to changes in the production function (the way our economy produces goods and services based on factor inputs and productivity) brought about by the unfettered entry of foreign workers.

6.12 No improvement in Malaysian worker’s wage and welfare
Because foreign worker are willing to accept low wages as compared to Malaysian workers, there is no incentive and rationale for government and business to innovate, automate or mechanise when foreign workers are available in abundance. Today, Malaysia has three so-called ‘advantages’ in our competitive equation – low wages, poor and dangerous working conditions and worker exploitation which are filled in by foreign workers. As a result Malaysian workers are pushed down the economic ladder unless they venture abroad or seek employment in the public sector (FMT, 2014). Thus, Malaysian economy will continue to drown in low productivity levels while Malaysians will forever be caught in the middle-income trap.

6.13 Restrictions on employment of foreign workers affect productivity
Due to restrictions on employment of foreign workers, businesses that relies heavily on foreign workers, face a labour shortage which is harming their productivity. The government has a policy to reduce the number of foreign workers to 1.5 million by 2015 because cutting off hiring foreign worker is crucial to increasing local wages. Business owners are not able to find locals that are willing to work for instance in food and beverages industry, furniture producers and rubber glove manufacturers (The New York Times, 2009).
In the news “Businesses Struggle With Malaysia's Restrictions on Foreign Workers” published on August 2009 reported that Mr. Muneandy, an 18-year veteran of food and beverage industry, is unable to find Malaysians willing to work as cooks, waiters or dishwashers, he is awaiting approval to employ more foreigners. But if he cannot get more workers soon, he says, he may close one of his outlets. Mr. Muneandy used to have a staff of 120 — almost all foreigners — working in his five restaurants across the city. But after the government made it more difficult for businesses to hire workers from abroad, he is down to 80 because he has been unable to replace the 40 employees who had to return home after the maximum work period of five years.
“If you are going to get a Malaysian to come to work, it’s very difficult,” said Mr. Muneandy, the restaurant owner. “They feel that by working in a restaurant, their pride is in question. They feel that Malaysians have already come to a stage where they are above certain other Asian countries.”
Dominant Semiconductor, a light bulb manufacturer with factories in Malaysia and China, is struggling to fill about 1,000 vacancies. Its chairman, Goh Nan Kioh, said the company was allowed to employ one foreigner for every local worker but could not find enough Malaysians to help increase its total work force. If the labor shortage continued, he said, the company might consider moving more of its labor-intensive operations to China.

6.0 Recommendations 7.14 Law in Malaysia
Equality and Equal treatment under law
Article 8 of Federal Constitution of Malaysia provides that ‘all person are equal before the law and entitle to equal protection of the law and by the use of term person as opposed to citizen, it is clear that this guarantee of right extend to all persons including migrant worker, be the documented or undocumented.
This equality also shows reflected in our Employment Act 1955 which applies to all works, irrespective of whether the person is a local worker or foreign.
Section 60L of the Employment Act reinforces this concept of equality and the prohibition of discrimination between workers. The right to complain about discrimination is accorded to all workers, local or immigrant and the duty is imposed on the Director of Labour to inquire into these complaints.
Migrant Worker and Trade Union
Migrant worker can join and be part of Trade Union but is prohibited from holding an executive position in Trade Union, i.e Section 28 (1) of the Trade Union Act 1959. The section is ultra vires the Federal Constitution, i.e Article 8 whereby this is certainly not one of the permissible discrimination listed in Article 8
Domestic Laws that apply to migrant worker
Besides the Federal Constitution, some of domestic employment related laws that is applicable to workers including the migrant workers are, * Employment Act 1955 * Sabah Labour Ordinance ( Sabah) * Sarawak Labour Ordinance ( Sarawak) * Workmens’s Compensation Act 1952 * Workers Minimum Standard of Housing and Amenities Act 1990 * Children and Young Person Act 1966 * Industrial Relation Act 1967 * Trade Union Act 1959 * Occupational Safety and Health Act 1994 * Wages Council Act 1947

7.15 Recommendations for business 7.16.15 Either to promote Truly Malaysia Experience or provide Confident, Reliable and International image in Hotel Industry
In 2008, government barred major airports and hotels from recruiting foreign workers for frontline jobs that deal directly with customers, in an effort to reduce foreign labour and ensure tourists are greeted by Malaysian faces upon arrival (Star, 2008). This is aligned with concept of ‘Truly Malaysia Experience’ for promoting Malaysia to tourist. There is raised in question either this concept should be applied throughout image of hotels or only just a saying as long as tourist visits Malaysia.
Since from study of Alleyne, Doherty, and Greenidge (2006) stated that people are one of the greatest costs and also one of the main assets of contemporary organizations. Company’s success in its survival and competitive position is determined by inter alia, workers’ qualities, attitudes, and behaviour in the workplace. The management of people is getting critical for hotel industry in recent years, when quality is emphasized. Because of in Malaysia, foreign worker in service line known to be more competitive in worker wages and more productive in works compare to locals, majority hotel employer prefer foreign worker. Means, there is a clash of interest between government want to promote Truly Malaysia Experience with difficulties in hiring good locals worker. Furthermore, according to Jauhari (2006) where the critical success factors in hotel industries are customer orientation; outstanding service; flawless operation management; marketing strategy; and cost management, which are all related to the image of the hotels. However Jauhari did not ever mention on localizing image building would be one of the critical success factors. He furthered his explanation that people’s knowledge and skills, with employee satisfaction are important interventions to the industrial growth of the hotels.
Some difficulties in finding local workers faced by employer in hotel industries are locals youths did not showing any point of interest. Second, youngsters (Gen Y) are difficult to get employed and less willing to work in the hotels for lower grade and status. The youngsters would prefer part time job in hotel like catering for functions in certain day, rather than get attached to the hotel for employment with a higher commitment.
Some positive aspects that locals worker bring to represent Malaysia other than only faces is locals having the general knowledge of Malaysia, for instance like places, products, goods, locations, attractions and others. These are somehow important in responding to the tourists that seek for advice and opinions. Despite of the locals would having more advantages than foreign workers, attributes to success seems not favouring on the aspect of customer care or relations, but the aim is to ensure the business operates, and jobs provided are functioning effectively.
In Malaysia, the approved nationals for services sector in Malaysia are Indonesia, Cambodia, Nepal, Myanmar, Laos, Vietnam, Philippines, Pakistan, Sri Lanka, Thailand, Turkmenistan, Uzbekistan, and Kazakhstan. Annual levy for the sector is about RM1,200-RM1,850 annual.
The above issues is not answerable since it is depends on the hotel management but for some employer to overcome this issues, they prefer to hired Sabahan which reported to be keener to work in hotel as front liners (Janie L.T et al , 2012). They also soft spoken, presentable and can converse well in English. These HR practices are considerable important to comprehend the hotels’ best practices in managing foreign workers in Malaysia. Based on the feedback provided by the hotels’ employees, it has shown that the image of the hotels would influence the customers’ perceptions and experience.

7.16.16 Influx of Foreign worker into Malaysia with or without documents

The presence of foreign worker is a critical issue for Malaysia market. Nearly 20 % (2.2 millions) of Malaysia’s workforce are foreign worker excluding illegal worker. There is an additional 2.2 million illegal foreign workers (Amnesty International, 2010). Strong recruitment of foreign worker is not new phenomenon. During British colonial during nineteenth century, Malaysia was a net receiver of foreign nationals, particularly form Indonesia, India and China who works in plantation, mines and construction sector.
The main negative impact is on low skilled workers and firms. Most of foreign worker has low skill of working. This group will compete with local that is low skill which the former will win since they are cheaper. Another concern is increase number of crime in Malaysia caused by foreign worker. Example case last year, 2013 where an Indonesian armguard killed Ambank Bank officer be one of the hottest news in Malaysia.
The main positive effect is on medium skilled workers and larger firms, especially in manufacturing since there is additional job to supervise foreign worker and reduce cost for larger firm.
Malaysia needs to control influx of foreign worker in our country. There is a debate whether want to apply quotas or levies. Almost every government in the world use qualitative restriction to control influx of foreign worker but economic literature and policy discussion shows price mechanism (taxes, tariffs and levies) can be more efficient and effective. Even though we implement quota, undocumented immigrant still happen but yet we do not gain anything from it or less benefit. If we increase the levies and tax from the employer, we gain benefit from it economically.

7.16.17 Dependency on foreign worker
Growth of our country economy make Malaysia is one of the highest country in South east Malaysia to have a large number of foreign worker. The reason why foreign worker interested in coming to Malaysia because there is high labour demand from many sector like construction, manufacturing and agriculture where this sector fail to attract local worker. Malaysia is facing shortage of worker. Furthermore, Malaysian employer preferably to hire foreign worker than increase wages to attract local to reduce cost even though government already urge employer to try their best to find local worker before hired foreign worker. This is the pull factor.
Push factor happens in home country of the foreign worker where the living standard, wages and security is low. They need to survive, thus need to find job in other country.
Furthermore, local emigrate, high standard of education of local also create pressure for employer to be dependent on foreign worker. The negative impact is, it will effect out national currency because of outflow of money.
Recommendation, government need to increase tax for employer who is hiring foreign worker. In addition we need to increase also levy for foreign worker. Means only those who is skilled worker can apply for the jobs. Government also need to implement reasonable quota for foreign worker to limits the abundance of worker in our country. For Malaysian, we need to change mentality that those kids who are enter vocational school is low standard compared to other school like boarding school. This will increase number of student entered ans can supply country will skilled worker.

7.16.18 Exploitation of foreign worker
Foreign workers working condition is often unsafe and unhygienic. Many do not received wages promised, get physical or verbal abused, be in human trafficking , and forced labour. Some, may find what their agent promised them is not true, even some cases the job promised is not even exist.
Many, never see any job contract at all, and some, contract written in English where they did not understand at all just before they depart for Malaysia. Migrant ususally hand over large sums of moneyto their recruitment agents in order to secure jobs in Malaysia. But they, they still have debt to repay. This need of repay limits their choice like travel back to home coutries, or choose hygenic place for living.
For many, returning to their home country is not an option eventhough they realized that they are being exploited. They amount of money they owe is to large and they find themselves in situations akin to debt bondage. Some agents hold this immigant passport and visa untill they finish pay their debts. This vulnerable situation where this immigrant has nowhere to go will be exploit. Their wages being cut every months until a few money left, being placed in unhygenic placed, and eat unhealthy food. Some will forced to do jobs that is dangerous and can cause death.
By Malaysian law, even immigrant have the same right as local worker. Immigrant workers can join and be part of a trade union but is prohibited from holding any executive position, i.e Section 28 (1) of the Trade Union Act 1959. By joining this, they will know where to channel their complain and opinion, seek for advice and know their rights as a worker. If it is limited for the immigrant where if you are in manufacturing, you need to join the manufacturing trade union, but you cant join the airlines union. This can void from foreign worker to be exploit. There is ab issues back in 24th September 1995 where The Labour Minister said that foreign workers are not allowed to join unions because they are living in the country on the temporary basis. He also added that there are sufficient labour laws to protect them from exploitation. He added that if foreign workers were permitted to join unions it might make local workers unhappy. The Malaysian Electrical Industry Workers Union and the Malaysian Trade Union Congress have said that the immigration department is breaking trade union laws by not allowing foreign workers to join unions.
In addition, awareness people in surrounding area also important. Sometime, if the foreign worker, example working as a domestic worker being lock and abused, she cant get any help from outside. So, people nearby need to help and made a report. Same goes to certain situation where worker being sexually abused by employer, other people who see it need to report because simetimes we do not know that the victim do not know what to do.

7.0 Conclusion
It cannot be denied that foreign worker have been of great assistance in overcoming the labour shortage in Malaysian market. However, in cognizance of overdependence on foreign workers and negative impacts induced by foreign worker, enforcement strategies are proposed to reduce the country dependence of foreign worker such as to attract local to work to replace foreign worker. The government could also minimized this negative impact by imposing levies, strengthening governance factor and migrating policies, diversifying source of labour, and eliminating undocumented worker.
Further studies on how to attract local worker to join Malaysian market and possible approaches how to eliminate undocumented worker are recommended.

8.0 References

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