Summary
The rapid economic growth experienced by Malaysia in its pursuit of becoming a high-income nation has been charted by higher labor utilization. The employment elasticity to an increase in gross domestic product (GDP) has been observed to intensify over the past three decades.
According to the official statistics, the number of foreign labor was recorded at 1.01 million in 2005 and increased to 2.23 million in 2019. In fact, between 2001-2021, it is estimated that around 4.5 million jobs have been created in the economy, with 27% filled by the foreigners.
The cost of foreign labor dependency can also be associated with the difference between the outflows and inflows of compensation of employees (COE). Widening deficits in balance of payment for COE hinders consumption-based growth for the country, indicating loss of expenditure opportunities on the domestic economy.
Streamlining social fund management, encouraging employer participation, improving foreign worker monitoring, and collaborating with industries, can facilitate shift towards a bottom-up foreign worker policy and ensure that foreign workers are better protected and integrated into the society, while at the same time protecting the domestic economy from the widening outflows.
