Malaysia’s Cheap Labour Crisis

Malaysia is facing a labour shortage. Will plans to relax a freeze on foreign service sector workers help?

By Catherine Chan for

Malaysia's reliance on cheap foreign labour is reaching a quiet crisis point.

Foreign workers comprise about two million of Malaysia's population of 28 million, with nationals from Indonesia, Bangladesh and increasingly Cambodia and Burma taking up the low paid, menial tasks that Malaysians usually don’t want to do. Many more work illegally in the country. But as these cheap sources of labour are drying up or becoming increasingly difficult to source, changes are occurring to Malaysia's tense social make-up.

Since Indonesia banned its nationals from undertaking new domestic jobs in Malaysia in 2009 following horrendous reports of abuse at the hands of Malaysian employers, middle class Malaysians have been getting desperate. As of February, some 35,000 families were on the waiting list for domestic helpers; increasing numbers of Malaysians are turning to Cambodia for their maids.

For families like the Ngs, having an Indonesian maid means more than just the luxury of returning to a spotless house, a freshly pressed and laundered wardrobe and home dinner cooked in a style to which they are accustomed.

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For the past 15 years Mr Ng, the family patriarch, has suffered from a debilitating disease that has left him unable to move and reliant on the help of Aci, the family's Indonesian maid, while his wife supports the family on her single income. 'We can't afford to have a nurse, and we rely on Aci to keep the house running while I'm out at work. We're grateful for the help.'

So strong is the demand for foreign workers that Malaysian men in financial difficulty have been known to hire themselves out for marriage to women (the majority of whom are from China) who can then extend their visas to stay and work in the country. Whether or not this work is in the sex industry is unclear.

This week, the Malaysian government relaxed a freeze on foreign workers in the services sector, and will allow 45,000 Indian nationals in to meet the ongoing labour shortage. But it has since announced that the decision is still under discussion.

Foreign workers are approved to work in specific sectors according to their nationality by the Malaysian Industrial Development Authority. From exclusive gated communities that employ Kashmiris as security to the Chinese-Burmese in the kopitiams (coffeehouses that serve as communal eating and meeting points), the influx of foreign workers is changing the way Malaysians see their country. 'I never know what language to speak to service people', complains one local. 'Now I start off in Mandarin and switch to Malay if I get a blank look.'

But the debate over letting in much-demanded foreign workers and allowing refugees into the country is ongoing. Around 80,000 refugees live in camps outside the major cities, waiting to be moved on to other countries, including Australia. More and more Burmese are entering the country, usually smuggled through the Thai border. 

One thing remains certain. As long as Malaysians shun menial labour and face a deficit in foreign workers, the services, hospitality, retail and manufacturing industries will suffer. And so too will Malaysia's long-term productivity.

Catherine Chan is an environmental lawyer and journalist based in Beijing.

(This article is an edited version of an entry that appeared in the Lowy Institute's Interpreter that can be found here.)