Time to press ‘re-set’ button on hiring of foreign workers

By WS Tan

I refer to FMT’s article, “FMM: Lets have a clear policy on foreign workers” on June 8.

I agree with the Federation of Malaysian Manufacturers that there is a need to have a clear policy on foreign workers. The current policy has for many years been inconsistent or unclear. It has created a lot of problems for employers and ultimately, for the country as a whole.

One day you can hire foreign workers from certain countries or for a certain industry. The next day, you cannot hire them. One day, you can deduct foreign workers’ levy. The next day, you cannot.

When the minimum wage on locals was first announced, there was confusion as to whether it applied to foreign workers or not. Foreign workers who never asked for a pay rise suddenly received a windfall and employers were landed with a totally unexpected and unplanned for increased in the costs of wages.

When it came to the renewal of work permits, the process was complicated and involved a lot of meaningless, wasteful paperwork. No one stopped to ask the purpose for those procedures and documentation.

It was very disruptive for businesses when new policies were introduced suddenly and quite often not fully thought through and implemented without consultation with all the stakeholders involved.

If the process of hiring was difficult, the process of sending foreign workers back home was equally difficult and complicated.

The employer needed to cancel foreign workers’ permits and get “a check out memo” stamped on their passport. I heard employers now also may need to get income tax clearance for them (when in almost all cases, their income should not reach the level to be taxable).

If you want to tax the foreign workers, make them pay for the levy and not expect employers to pay the levy for them. Even if you send them to the airport, there is no guarantee that they will actually board the plane and leave the country.

By right, there should be no need for any complicated paperwork at all. The employer can just buy their air tickets and send them by themselves or through an agent to the airport a few hours earlier to a separate immigration office within the airport (who will acknowledge receiving the worker), who will ensure that the foreign workers actually leave the country.

Hiring foreign workers more costly than hiring locals

The current complicated procedures have resulted in the hiring of foreign workers becoming more expensive than the hiring of locals.

Unfortunately, this will not deter the hiring of foreign workers because in many cases, locals simply do not want to do the jobs foreign workers do even if the minimum monthly wage is raised to RM1,500 or higher.

In such cases, raising the minimum wage of foreign workers to be the same as locals, paying their levy and giving them free accommodation will only benefit the foreign workers (and not locals) and make local industries less competitive compared with our neighbours like Indonesia, Vietnam, Laos and Cambodia because their labour costs are far lower than ours.

I am from the manufacturing industry. Based on my experience, a lot of manufacturing processes can be simplified.

It does not make sense at all if something that can be completed (to achieve a certain objective) in three steps, takes 10 steps. The same can be applied to practically anything including the processes and procedures in the hiring and termination of foreign workers.

Before we even look at the processes, it is of utmost importance that we have a clear policy on the recruitment of foreign workers.

Unless and until we have a clear policy on why and under what circumstances we allow foreign workers to be hired, we will only end up getting everything else wrong.

There must be clarity of objectives and purpose in the hiring of foreign workers.

Of course, we do not want foreign workers taking up the jobs that local Malaysians are prepared to do but I am also sure that there are certain circumstances where we truly need foreign workers to do certain jobs that no locals want to do (even if the monthly minimum wage is increased to above RM1,500).

In those circumstances, the businesses who really need foreign workers will simply “close shop” if they are not allowed to employ foreign workers or cannot employ them fast enough.

It is a tragedy if jobs that locals are able and willing to do are taken up by foreigners simply because they are willing to accept lower pay.

But it is also a tragedy if local companies “close shop” or cannot do better (even though they have a lot orders and demand for their goods or services) simply because they are prevented or hindered from employing foreign workers for jobs that locals simply do not want to do.

For example, many Malaysians do not want to work in the plantation and construction sectors. Many Malaysian also do not want to work “night shifts” and as a result, many factories are left idle or with very low productivity at night because there are not enough workers.

It is a tragedy when factories have a lot of orders but not enough workers because we “over protect” locals who simply do not want to do those jobs or do not want to do the “night shift” of those jobs.

Thorough review and clear policy on foreign workers needed

There must be a thorough study and review of the situations where foreign workers should be allowed to help those sectors where Malaysians simply do not want to work irrespective of their salaries.

You should not control the number of foreign workers coming to Malaysia by increasing the costs of hiring them. There is not need to. You can control the number of foreign workers by not granting them work permits or reducing the number of work permits granted to them after thoroughly reviewing the availability of locals for such jobs.

Let us press the “re-set” button and start anew by creating a very clear policy on the hiring of foreign workers and then, review the processes to make it simple to save time and costs.

I also agree with FMM that the hiring and management of foreign workers must come under the purview of the Human Resources Ministry instead of the Home Ministry because it is the Human Resources Ministry (that has all the data from the Labour Office) and is in a better position to know whether or not foreign workers are truly required.

Currently, any employer of foreign workers must not only deal with the Labour Office but also with the Immigration Department for work permits. It is a very complicated process and takes a very, very long time.

The Home Ministry’s duties should be focused on the security of the nation i.e. the immigration aspect of it.

The Home Ministry, that is in charge of the Immigration Department, should focus on foreign workers in Malaysia illegally and send them back home. Foreign workers who have been sent home and blacklisted for overstaying or committing any offences should never be allowed to re-enter the country.

There must be clarity in the duties of the Home Ministry and Human Resources Ministry in respect of foreign workers in Malaysia. Both ministries should avoid the unnecessary overlapping and duplication of job functions.

Only when we are very clear in our minds about the objectives and purposes in allowing or disallowing the hiring of foreign workers, will we be able to formulate the right policies in the hiring and firing of foreign workers.

And only when we have the right policies in place, will we be able to formulate very simple processes and procedures in hiring foreign workers and sending them back when their contract expires or is terminated.

WS Tan is an FMT reader.

The views expressed are those of the author and do not necessarily reflect those of FMT.

FMM: Let’s have clear policy on foreign workers