Malaysia freezes recruitment of foreign workers after protests

[KUALA LUMPUR] Malaysia said it will suspend the recruitment of foreign workers while it assesses gaps in the labour force, a second flip-flop on employment policies this month after objections over the plans.

The freeze will also allow the government to review a levy system for overseas workers in Malaysia, state news agency Bernama reported Friday, citing Deputy Prime Minister Zahid Hamidi. The decision came after companies and some non- government organizations protested a reported intake of 1.5 million workers from Bangladesh over the next three years, which the government earlier said was to meet the demands of industries.

Malaysia's Human Resources Minister Richard Riot Jaem clarified Friday that he signed an agreement with Bangladesh's government this week that would allow 1.5 million Bangladeshis registered to seek work overseas to find jobs in Malaysia. It didn't mean that all of them will make their way to the Southeast Asian nation, he said.  The explanation came after widespread criticism in Malaysia, with at least one manufacturers group saying the entry of a large number of workers would exacerbate the problem of undocumented foreign labour in the country. The policy also diverges from a plan to reduce reliance on overseas workers.

Malaysia should look at labour market demands more closely when determining foreign worker inflows as its current approval system doesn't sufficiently reflect the needs of industries, the World Bank said in December. It advised the government to improve its existing evidence-based system for identifying labour shortages in the economy and change its levy structure to one that could keep up with varying market conditions.

Malaysia earlier in February agreed to defer a plan to double foreign worker levies pending discussions with businesses after they opposed the sudden decision. Prime Minister Najib Razak's administration is trying to wean the country off its dependence on cheaper labor from overseas while seeking new ways to bolster its coffers as a decline in oil prices hurt government revenues.

There are 2.1 million registered foreigners in Malaysia out of the 15.3 million labor force, Riot told reporters Friday. The total number of foreign workers would have exceeded the government's limit of 15 percent of the entire labor force when unregistered ones are included, he said. Indonesians make up the biggest presence of overseas workers in Malaysia, followed by Nepal, Bangladesh and India, he said.

Najib said the government needs to address concerns over any social fallout and problems created by a large inflow of workers, Bernama reported Thursday.

BLOOMBERG