COVID-19 exposed many flaws in our labour market. The pandemic disrupted global and regional movements of migrant workers — documented and undocumented — as nations shut their borders to keep out the virus.
Malaysia, heavily dependent on migrant labourers who fill up nearly half of all low-skilled jobs, reported a contraction in gross domestic product numbers when the borders were closed.
Covid-19 caused significant manpower shortages for export-oriented industries.
The ongoing disruptions to labour pose a threat to our export-reliant growth model and supply of essential goods.
Malaysia is an integral part of the global supply chain for semiconductors, medical gloves and palm oil.
It accounts for seven per cent of the world's semiconductors and 13 per cent of assembly testing and packaging — goods that are already experiencing shortages.
The country also supplies 28 per cent of the world's palm oil and 33 per cent of global exports, and produces 65 per cent of the world's rubber gloves supply.
To profit from the pandemic, some industries forced employees to work excessive hours without adequate breaks, withheld wages, reduced rest days and housed workers in unhygienic dormitories. As a result, the United States Customs and Border Protection banned several Malaysian companies after uncovering evidence of forced labour.
In response, Putrajaya amended the Employment Act by adding fines and jail time for those guilty of forced labour, launched a National Action Plan on Forced Labour and implemented a labour recalibration programme.
These will not, however, address long-term labour needs nor encourage industries to innovate and reduce reliance on foreign workers. Socio-economic problems related to foreign workers and artificial depression of local wages will continue to impact Malaysians negatively.
The time is ripe for reforms to the migrant worker policy. Penalise labour abuses, but also push industries to adopt automation and other innovations.
The government has prepared a multi-tier levy system for foreign workers, ensuring their numbers are based on the actual needs of a specific industry. But, its implementation has been delayed since Jan 1, 2019. The next rollout has been pushed to July 1.
This is counterproductive. Bank Negara Malaysia had crunched the numbers in 2018, showing that once implemented, an additional levy should be imposed on industries heavily reliant on foreign workers.
The new levy can be calculated on automation possibilities, wage growth and productivity improvements. A levy will force firms to invest in increased productivity through innovation, moving away from a reliance on foreign labour.
Malaysia must also push for a regional labour recalibration initiative. A multilateral agreement should be formulated by Asean members on a centralised approach towards economic migrants. Solicit support from Thailand (which hosted 3.49 million foreign workers last year) and Singapore (1.33 million).
Asean should eliminate piecemeal government-to-government deals and middlemen by creating a one-stop agency to tackle issues concerning the recruitment and treatment of foreign workers.
The United Nations reported in 2020 that manufacturers in developed nations are likely to implement reshoring business strategies post-pandemic, aimed at reducing the risks of sourcing from distant suppliers located in poorer countries.
Given that the global value chain participation of conglomerates in places like Malaysia is likely to decline, Asean countries are at higher risk of losing out on industrialisation opportunities. Regional coordination is necessary to ensure nations remain on the path towards industrialisation.
The pandemic has also prompted restructuring across industries and employment sectors across the region.
This gives rise to race-to-the-bottom issues and exacts a toll on workers. With Covid travel restrictions easing, migrants are returning home to lower-income countries dependent on remittances.
Regardless of their migration or legal status, foreign workers need access to a safety net. State actors must see the importance of treating labour migration as an integral part of labour and a social protection issue.
An Asean multilateral agreement on social protection and integration will not only mitigate the negative impacts of the pandemic, but also recalibrate regional economies in a more ethical, efficient and sustainable manner.
As the global economy reopens, Malaysia and Asean should act quickly to ink a multilateral agreement to promote policy coordination on border control.
It would ensure regional economic growth and long-term job creation, while securing the health and safety of all workers.
The writer is a researcher at the Institute of Strategic and International Studies (ISIS) Malaysia.