A recent BBC article highlights an increasing shortage of low-skilled labor in Malaysia after the government imposed stricter policies for legal immigration. The situation is similar to that in many Western countries where governments have reduced the inflow of foreign labor by instituting minimum education requirements for immigrants, making visa application processes longer and more expensive and setting limits on the number of work visas granted every year. The Malaysian government took this step because of frustration among citizens who believe that low wages paid to immigrant workers was preventing Malaysia from becoming a high-income country.
While it is true that Malaysia is still a middle-income country, it’s aspirations of becoming a high-income nation will not be met by the misguided labor market policies it is currently adopting. Rather, Malaysia should use the increased interest in Southeast Asia and particularly in its own economy to build on the successes it has had in recent years through labor market liberalization. The argument is simple for allowing immigration of skilled workers – their expertise will be critical in transforming Malaysia from an exporter of cheap goods to a manufacturer of high-end products with an increasing emphasis on the service sector. Even in the case of low-skilled labor, there are several reasons for Malaysia to reconsider its current policy direction. As the BBC article highlights, the restrictions on immigration have led to unglamorous businesses such as cleaning, food services, etc. that rely on low-paid workers suffering the most. Malaysians do not want these jobs and disrupting the supply of workers from poorer nations that work in these industries will force businesses in that sector to close down. Increasing diversity and improving the image of Malaysia as an open and welcoming country thought liberal immigration policies will also help the nation take the next step from a middle-of-the-pack country to a leading center of business in the globalized world. Most importantly though, decreasing or eliminating legal immigration will inevitably create more incentive to come to the country illegally, which will lead to less assimilation and fewer taxpaying, law-abiding citizens.
Malaysia ranks a dismal 113th in the ‘Starting a Business’ category in the World Bank’s 2011 Doing Business Report. Misguided labor market policies at this stage will only throw a spanner in the economy building work that has led to strong growth in Malaysia for the past several years. Malaysians need to realize that low-skilled migrant workers do not represent competition to them. Instead they should be welcomed as substitutes in low-paying but essential jobs which in turn will allow natives to gain more education or vocational training and focus on high-end production, service sector jobs and managerial positions. This will allow liberalization of the labor market to be a win-win for immigrants and natives alike.
