Académique Documents
Professionnel Documents
Culture Documents
CHAPTER 2
LITERATURE REVIEW
2.1
Introduction
2.2
In the earlier days, most construction workers in the country were locals who
were recruited through the apprenticeship system (Wong, 2003). In this system, a
foreman, usually skilled, will recruit workers within his community, as the need
arises. He is responsible to train the workers, including arranging the worksite,
material and sequence. These workers were usually paid daily, through the foreman
who gets paid for the piecemeal work done or makes fee over each worker under
him.
10
In the seventies and early eighties, nearly 70 percent of the foreign workers
were concentrated in the construction sector because the country was experiencing a
construction boom (Ghosh, 1998). During this construction boom, there was a great
influx of foreign workers, predominantly from Indonesia and later, workers from
Myanmar, Bangladesh and Thailand. Most of these workers came in either illegally
or overstayed their visit pass. Azian (2004) also stated that our local workmen are
no longer able to sustain the demand and needs of the industry. The industry in
order to maintain the rapid expansion has to opt for foreign worker.
At about the same time, local skilled foreman and workers were lured
overseas to countries such as Singapore, Taiwan and Japan where they were paid a
much more higher salary for their skills. This is why the Construction Industry was
left with such a high proportion of foreign workers.
2.3
Today, it is obvious that the foreign workers are part of Malaysian society.
The number of foreign workers in the country can only be estimated. Malaysia in
recent years has absorbs large numbers of foreign workers to work in low-paying,
low skilled fields.
11
According to an Economic Report 2003/2004, foreigners constitute 9.9% of
the total labour force (10,514,900) in 2003. Foreign labour has become an integral
part of the Malaysian labour forces, particularly in the construction industry. There
are many estimates of foreign workers in Malaysia but the data on the number of
foreign workers have to be interpreted with caution because there is no foolproof
study or survey giving exact number.
Malaysians are aware that the actual number of foreign labour far exceeds this
number. It is estimated that approximately 1.5 million foreign labour (both legal and
illegal) work in Malaysia.
It is also estimated by (Ames, 2001) that there were over 230,000 foreign
workers entered the country in 2000, mostly from Indonesia and the Philippines and
others source include China, Bangladesh, Myanmar and Thailand. These workers
are normally employed in jobs critics label the 3 Ds-dirty, dangerous, and
demeaning. In general, low-skilled foreign workers are employed in positions that
most Malaysian simply refuse to do.
The Home Affair Ministry, Datuk Azmi Khalid noted that Malaysia had 1.2
million legal foreign workers but estimated that there was one illegal foreign worker
for every legal worker (The Star, 07 May 2004).
Minister Datuk Dr Fong Chan Onn added that the number of foreign workers
registered with the ministry currently topped 1.2 million, excluding illegal ones in
The Star (06 May 2004).
Dr Tan Seng Giaw (2002) stated that we do not know the actual number of
illegal immigrants. It may be one million (1,000,000) or more. Every night, they
12
may land at over seventy (70) places in Malaysia. There were an estimated 1.2
million illegal workers in the country.
According to The Star (05 August 2004), it is estimated that the number of
foreign workers could rise to as high as five million by 2010 if employers continued
to depend on them. As long as there is an unlimited supply of foreign labour,
employer will continue to use them to their advantage.
2.4
Generally,
Malaysia has a tolerably pleasant moderate climate and the people are friendly, cooperative and helpful. Politico-economic stability is another very tempting factor
influencing the inflow of foreign labour. The country always presents an open and
liberated atmosphere. The permissive and free society of Malaysia is a heaven for
foreign workers.
13
2.4.1
Many causes have been responsible for the inflow of foreign workers in
Malaysian construction industry. Among the causes of the inflow of foreign workers
in construction industry are as follow:-
a) Constructions jobs poor images, poor working conditions and local prefer
easier jobs
Lets be realistic, Malaysian prefer easier job, foreign labour are mainly in
the lower end, heavier kind of job. In construction industry, for instance very few
local want to work in the industry. They prefer to take employment in a comfortable
environment like air-conditioned factories and office which offer white-collar jobs.
Another reason why the Malaysian construction industry felt the need for
importing workers from abroad is due to foreign labour do what has come to be
known as 3 Ds works -dirty, dangerous, and demeaning in Malaysian that local
Malaysian shy away from this type of job. They are generally not interested in the
jobs currently held by foreigners.
14
c) Low wage structure for construction jobs
The locals shun employment in construction sectors also due to the wages
are deliberately kept low and low wages for high risk jobs. Some companies are
deliberately keeping salaries low to encourage a high turnover of locals and
convince the authorities to allow foreign labour.
Equally important is the fact that with higher education levels, nowadays, it
is too common for local young generation to study until Penilaian Menengah
Rendah (PMR) level and even Sijil Pelajaran Malaysia (SPM). Therefore, the local
youth in general are beginning to shun 3 Ds jobs that are dangerous, dirty and
demeaning.
This created many opportunities for foreign labour and employers started to
import workers from neighbouring countries to perform low paying manual jobs in
construction industry.
e) Employer can easily bring in foreign labour and prefer employing foreign
labour
15
and only choose workers who are not only inexpensive but also have the necessary
skills and comply with strict discipline and hard work.
Therefore, the preference will be for foreign labour who will accept both
lower wages and worse terms and conditions of employment, as their primary
objective is to earn as much money as possible within a short span of time. Michael
(2001) also stated that newly arrived labour willing to accept lower wages and less
attractive conditions. The foreign labour paid less than local citizens even if they
perform the same jobs.
MTUC president Zainal Rampak was stated that employers were more
inclined to hire foreign workers who were prepared to accept low wages. National
Local Authorities Employees Association Chairman Abdul Rahman Mahad, who
gave similar views, added that besides getting cheaper labour from foreign workers
employers also hired such workers as they were prepared to work longer hours.
(The Star, 05 August 2004)
The employers who took the foreign workers in construction were only
interested in cheap labour because the firms did not have to pay out EPF and Socso
benefits. According to Tey (1997), it is believed that there are no real shortages but
employers prefer aliens especially illegal ones because they can easily be exploited
as they have no recourse to law and justice.
2.5
There are various impressionistic views about the impact of foreign workers
on the economy and society of Malaysia. People generally tend to feel that foreign
workers are creating problems in the country and the economy.
16
again on centre stage. The following are the various impacts of foreign labour in
construction industry:
a) Cultural Pollution
Most foreign workers are peaceful. They want to earn money to send home.
In most cases, concern over foreign labour is linked to anxieties over what some
have characterized as cultural pollution and over foreignisation (Weiner, 1990).
They may change the cultural and social orders of the normal practice of the locals
in construction industry.
b) Social Problem
Legal and illegal foreign labour also pose many social problems and make
impacts on the locals. They create many social problems like spread of diseases,
theft, robbery, cheating, rape, killings, illegal settlements and so on. They form
syndicates. If there are no syndicates, legal and illegal immigrants cannot arrive in
Malaysia.
c) Political Stability
The inflow of legal and illegal workers poses many implications on political
issues. The local population is fearful for the countrys harmony, security, social,
economic and political stability. The locals are fearful of becoming a minority
group unable to express views, influence or control the country politically if the
influx of foreign workers on such large scale.
17
The precarious balance between the Malay and the Chinese, Indian, Kadazan
and Iban communities could be easily distorted with continued arrivals of foreign
labour into the country. Indonesian migrants are said to be similar to Malays and in
most cases they can be easily mistaken to be Malays. Meanwhile, migrants from
Philippines are similar to the Chinese and Kadazan, and those migrants from India,
Pakistan and Bangladesh are said to be similar to the local Indians. Therefore, the
Government must keep an eye on them.
d) Economic Issues
The foreign workers have had an impact on the wage structure, labour
market, competition with locals.
Foreign workers also thought to be responsible for the higher rate of inflation
because of their increased demand. They enjoy public goods without paying taxes
and user fees. As such they become free-riders in the Malaysian economy. They are
ensured health and other facilities without corresponding payments.
However it cannot be denied that the use of temporary foreign labour enables
the rapidly growing economics and societies to fill manpower needs in dead-end,
low status, low wage sectors of the economy such as construction sectors (Zehadul
et al., 1999).
e) Low wages for local workers and Taking jobs away from locals
18
Foreign workers are taking over work from locals. In construction industry,
the foreign worker going into sub-contracting work, where there is a lot of money to
be made. That is why they can build big houses and take over Malay reserve land.
Besides, the presence of the illegals create problems also since illegals are not
constrained by rules and regulations and are free to infiltrate into any jobs so long as
the employers are willing to accept them.
They also make inroads into jobs not designated for them, thus putting them
into direct competition with locals.
repatriating foreign workers who are not needed because they are taking jobs away
from Malaysians.
19
g) Low productivity and quality due to time consuming to train new workers
The reduction of the duration of temporary work permits for foreign workers
from six or seven years to only three years had caused deterioration in the poor
quality of workmanship and low productivity. Foreign labours that have had three
years experience may be replaced by those do not have prior construction
experience, thus resulting in low productivity and poor quality of work. Some of
them were not able to cope with new experience of working on large-scale projects.
Azlan (2004) also mentioned that the lack of quality foreign labour that have been
hired is one of the main problems in construction industry.
The companies that lose workers will need to hire new ones, who are likely
to be unskilled and inexperienced. That means the employers have to spend time
and resources to train these new workers. As indicated in Master Builder (Kok,
2003), upon commencement, the foreign labour would require another 2 to 3 months
to go through an orientation or learning curve period before they become productive.
Furthermore, on-the-job training will take around seven to eight months then
only the foreign workers will begin to contribute to company. To some extent, the
training was difficult, as most foreign labour were paid daily wages and were
reluctant to undergo training due to loss of pay.
h) Heavy expenses in the recruitment process and long permit processing times
Contractors
securing new jobs have problems mobilizing new workers on time, due to this long
work permit or recruitment process.
20
As indicated by Tey (1997), the legal importation of foreign labour was and
still time consuming and costly. Kok (2003) also summarised that based on current
experience, it takes about 2-3 months on a best case scenario to go through the entire
administrative process, commencing from obtaining a work permit from the ministry
of Home Affairs to the foreign workers gaining physical entry into Malaysia to
work.
Therefore, it is not cost effective to send foreign workers home after just
three years because of the heavy expenses in the recruitment process. Meanwhile,
the process to bring in foreign workers is tedious and time consuming. Furthermore,
a lot of cost is involved in medical examinations, transportation and levies. Thus,
there is pressure in the system for employers to employ illegal foreign labour and to
dodge the levies and charges which are incurred on the employment of legal foreign
labour.
2.5.1
21
In recent years, there has been a huge cry that the foreign workers have
created enormous socio-economic problems in Malaysia. However, it is not to deny
the positive impacts of foreign labour on economic issues. Assuming that there are
many problems the evidences (Chan & Moha, 1998) indicated that there are also
direct and positive impacts of the foreign workers.
More importantly the foreign workers accepted those jobs which are not
often welcome by the local workers especially the construction jobs that known as
22
3Ds job. Moreover, if we assume that the foreign workers are equally productive as
the local workers, one can safely say that foreign workers make net positive
contributions.
It has already been brought to our notice that the value added of dollar spent
on labour in Malaysia is around five times in the manufacturing sector (Ghosh,
1998). If this is true, then there are sufficient positive value-added effects of foreign
workers in the Malaysian economy.
2.6
In all probability, it is belief that the demand for foreign labour is going to
escalate in near future in construction industry. So what should be the government
policies and strategies? The strategy behind the policies is to stop the inflow of new
migrant labour into the country, as well as to reduce the number of migrants already
in the country. How can this be done?
Due to the above situation, the authority governing the industry with the
assistance of construction associations has formulated several proposals to overcome
the problems faced by local contractors when dealing with foreign labour in
construction industry.
23
happening such as the armed clash involving some 50 men from two groups of
Indonesians in a Selangor village.
The foreign workers were needed to fill the gap left by local and not as a
long-term measure to enable employers to cut cost. Therefore, the Government had
identified several measures to make it harder for agencies to bring in foreign
workers and to reduce countrys dependency on foreign workers.
2) Requiring employers to apply for approval from the ministry to hire foreign
workers based on need;
3) Closely monitoring companies planning to introduce voluntary separation
schemes (VSS) to prevent them from being used as a guise to lay off local
workers; and
4) Requiring employers to advertise vacancies for at least two consecutive days in
major local dailies to allow local workers the chance to secure employment.
24
Malaysia now also requires newly arrived workers to attend a course on the
Malay and English languages, besides attend familiarization course on local culture,
before issuing them a visa. New guest workers would have to receive a certification
from the National Vocational Training Council stating that they have undergone the
familiarization course before they can be issued an entry visa.
25
Immigration Department Electronic Application System (IDEAS), employers can
sign up and be linked to the department for easy and hassle-free application.
With this, individual employers and representatives of agencies need not
travel to the various departments to submit their applications, hence cutting cost,
saving time and preventing loss of documents, but, employers are required to
register themselves with the department first before getting user ID and Password
for access to the online service.
redundancy, he shall not terminate the services of local employees unless he has first
terminated the services of all foreign employees in a capacity similar to that of the
local employee (Rajkumar, 2001)
The Ministry should monitor the situation closely and ensure that only
employers who have really tried to recruit locals but failed are allowed to hire
foreigners. Industrial Relations Department should also be given the power to stop
companies from retrenching permanent employers while keeping foreign labour.
Human Resources ministry must ensure that foreign labours are terminated before
permanent staff can be retrenched.
26
construction site personnel. They should put in further efforts and improvement on
skilled status to upgrade the professionalism and image of the building sector to
make it more competitive.
CIDB chief executive Datuk Abdul Rahman Abdullah (2004) said that the
green card system was also an indirect way of helping to weed out foreign workers
who are employed illegally in the construction industry. This is due to in order to
obtain the green card, they would need to first have a work permit. Thus, once the
law making the green card compulsory is passed, the issues of contractors engaging
illegal should not arise.
Construction Labour Exchange Centre Berhad or in short CLAB, is a nonprofit organization that was established on November 13, 2003 pursuant to the
decision of the Jawatankuasa Kabinet Pengambilan Pekerja Asing (JKK-PA) (Azlan,
2004).
CLAB had been set up to look into shortage of construction worker as the
numbers of foreigners were reduced. Initially CLAB, can absorb excess foreign
workers in the country or those workers who have already attained some skills
would be retained in the country, instead of being repatriated and avoid bringing in
new unskilled workers when they have no more jobs or does not need some workers
of certain trades.
CLAB can also provide facilities to upgrade the workers skills either on or
off-site. Over time, contractors shall still engage their own core workforce and can
turn to CLAB for additional or skilled workers when necessary. CLAB should
ultimately only maintain skilled workers.
27
The majority of foreign labour brought into the construction industry were
wet trade labour involved in concrete, brick, and wood works.
To reduce
construction industry dependence on such foreign labour, we must change the way
we work by reducing wet trade in the construction process. This could be achieved
through implementation of the Industrialised Building Systems (IBS) Roadmap
2003-2010.
28
reduced and construction works focused on the use of the mechanisation and
prefabrication.
The government has been saying for some time now that labour intensive
should turn to modern technology to reduce their dependence on foreign labour. In
order to overcome the shortage of labour and not to depend on foreign labour, the
local contractors must change their construction techniques from labour intensive to
technology intensive.
29
improve the available training systems to cater for current and future needs. Besides,
special incentives must be given to employers and worker for retraining of workers,
so that they can acquire new skills, which will respond to changes in demand for
skills in the labour market as a result of changes in technology and organization and
methods of work (MIDA, 2004).
2.7
Summary
In the longer term, all players involved in the construction sector need to
seriously explore avenues to attract local youths to enter the construction industry by
improving the image and working environment and this implies offering competitive
wages and benefits, improved work-safely procedures, and instilling a sense of pride
in construction work.