Malaysian companies from palm oil plantations to semiconductor makers are declining to accept orders and foregoing billions in sales, hampered by a shortage of more than a million workers that threatens the country’s economic recovery.
To alleviate the labour crisis Malaysia has reopened its manpower market for Bangladesh after a four-year ban and has agreed to hire 500,000 Bangladeshi workers over the next five years.
Bangladesh signed an agreement in December to send workers, but implementation was delayed after Dhaka protested Malaysia’s proposed hiring process, citing fears the plan could lead to increased costs for the workers and debt bondage, Reuters reported, citing a diplomatic source.
Despite lifting a Covid-19 freeze on recruiting foreign workers in February, Malaysia has not seen a significant return of migrant workers due to slow government approvals and protracted negotiations with Bangladesh over worker protections, say industrial groups, companies and diplomats.
The export-reliant Southeast Asian nation, a key link in the global supply chain, relies on millions of foreigners for factory, plantation and service sector jobs shunned by locals 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 fulfil orders," said SohThian Lai, president of the Federation of Malaysian Manufacturers, which represents over 3,500 companies.
Palm oil growers are at breaking point, said Carl Bek-Nielsen, chief executive director of the 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 1.2 million workers in 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 550,000, 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 palm oil industry, which contributes 5% to Malaysia's economy, warns 3 million tons of crops could be lost this year as fruit rots unpicked, meaning losses of more than $4 billion. The rubber glove industry estimates $700 million in lost revenue this year if the labour shortage persists.
Workers' rights
In April, minister Saravanan said companies had asked to hire 475,000 migrant workers but the ministry had approved just 2,065, rejecting some for incomplete information or lack of compliance with regulations.
Diplomats from Bangladesh, one of Malaysia's biggest sources of foreign labour, told Reuters that workers’ rights were part of the hold-up in sourcing migrant workers.
“Our main focus is our workers’ welfare and rights," Expatriates’ Welfare and Overseas Minister Imran Ahmed said.
“We're making sure they get standard wages, they have proper accommodation, they spend minimum cost for migration and they get all other social security.”
He told Reuters that Dhaka did not “want workers to end up falling into a cycle of debt trap,” adding that Malaysia wanted to hire 200,000 Bangladeshi workers within a year.
The United States has banned seven Malaysian companies over the last two years over what Washington called forced labour.
Malaysia's Saravanan, who was in Dhaka early this month, said Malaysia had given the Bangladesh government reassurances that it would ensure better salaries and protection of workers' welfare. He has denied claims that the hiring process was flawed.
Saravanan said last week the government was finalising technical matters, recruitment procedures and agreements with some source countries.
