Opinion: Malaysia Labour Shortage

By Koon Yew Yin

Disclaimer: The views, thoughts, and opinions expressed here belong solely to the author, and not to Ipoh Echo Sdn Bhd.

I was the Secretary General of the Master Builders Association, Malaysia for 9 years before. A few members have asked me to write this article so that our Human Resource Minister can resolve this crucial problem as soon as possible. Currently many building constructions cannot proceed because of labour shortage. Moreover, building contractors will have to pay a liquidated penalty for late completion.  

Malaysian companies from palm oil plantations to semiconductor makers are refusing orders and forgoing billions in sales, hampered by a shortage of more than a million workers that threatens the country’s economic recovery.

Despite lifting a Covid-19 freeze on recruiting foreign workers in February, Malaysia has not seen a significant return of migrant workers because of slow government approvals and protracted negotiations with Indonesia and Bangladesh over worker protection, say industry groups, companies and diplomats.

The export-reliant nation, a key link in the global supply chain, relies on millions of foreigners for factory, plantation and service sector jobs shunned by Malaysians as dirty, dangerous and difficult.

Manufacturers, who make up nearly one-fourth of the economy, fear losing customers to other countries as growth picks up.

Despite the greater optimism in outlook and increase in sales, some companies are gravely hampered in their ability to fulfill orders,” said Soh Thian Lai, president of the Federation of Malaysian Manufacturers (FMM), which represents more than 3,500 companies.

Palm oil growers are at breaking point, said Carl Bek-Nielsen, chief executive director of oil palm grower United Plantations.

“The situation is dire and very much like having to play a game of football against 11 men but only being allowed to field seven,” he said.

Malaysia lacks at least 2 million workers across manufacturing, plantation and construction, a shortage worsening daily as demand grows with an easing of the pandemic, industry and government data show.

Manufacturers say they are short of 600,000 workers, construction needs 600,000, the palm oil industry reports a shortage of 120,000 workers, chipmakers lack 15,000 and cannot meet demand despite a global chip shortage, and medical glove makers say they require 12,000 workers.

The construction industry

The construction industry in Malaysia is facing a worsening labour shortage. The industry is still lacking 600,000 to 800,000 more workers to meet the requirement of 1.2 million workers in the construction industry.


Chipmakers are turning away customers, Malaysians are not interested in working in the industry and many who do join, leave in less than half a year, says Wong Siew Hai, president of the Malaysia Semiconductor Industry Association.

Palm oil industry

The palm oil industry, which contributes 5% to Malaysia’s economy, warns that three million tonnes of crop could be lost this year as fruit rots unpicked, meaning losses of more than US$4 billion.

The rubber glove industry

The rubber glove industry estimates US$700 million of lost revenue this year if the labour shortage persists.

Labour-intensive industries are urging the government to resolve labour woes quickly across critical sectors as not all work can be automated as well as well derailing the economic recovery prospect.

To date, Malaysia’s rubber industry has lost RM30 billion in the last three years due to the lack of workers, while Malaysian Palm Oil Council (MPOC) warned the industry may not generate an extra RM20 billion revenue this year, due to the nationwide acute shortage of manual harvesters.

SME Association

SME Association of Malaysia’s national secretary general, Chin Chee Seong said small and medium enterprises (SMEs) are also facing a shortage of 300,000 workers involving food and beverage (F&B) manufacturing, furniture as well as agriculture sector.

“Service industry, of course, there is a shortage of workers for retail F&B and small contractors for renovation, logistics and transportation, they rely on these workers.

“Many local farmers are finding it difficult to get workers now with a shortage of foreign workers. So, we really need the government’s help to assist SMEs for survival,” he told The Malaysian Reserve (TMR).

Chin suggested the government to do a campaign to encourage more Malaysians to take up unskilled jobs and tell them the salary is not that low.

“Foreign workers now are very demanding and asking for salaries from RM2,000 to RM2,800 with accommodation as well. The levy tax that the companies have to pay by the companies is huge too. 

“Hence, if locals are willing to take out the job, I think they can equally get a good pay,” he said.

In the longer term, he hopes that the relevant ministries and government agencies would engage with industry players to find ways to cut down dependence on foreign workers in order to move to a high-income nation.

Malaysian Footwear Manufacturers

Malaysian Footwear Manufacturers Association’s (MFMA) president, Rachel Foo said the footwear industry is facing the same challenges especially when many are trying to commit to the order for the upcoming Chinese New Year and Hari Raya. She is hoping the Ministry of Human Resources would decide on the ‘right’ number of foreign workers to be allowed to work in the country again.

“Not all industries can easily switch to ‘automation’ or interest from local workers. For example, Malaysian footwear is famous for strappy sandals, and to automate the process is very difficult, because it requires human skill and finishing.

“The government can consider starting with a minimum local vs foreign workers quota, and adjust it by each sector later on,” she told TMR.

Foo said if the standard operating procedure can be designed to cover many industries differently, the number of foreign workers can also be adjusted according to each industry’s request.

“We urge the government to reconsider the decision in bringing foreign workers. The situation of each industry must be studied individually. Human resource is a very complicated subject, no blanket rules should be applied across all industries,” she added.

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