Labour and migration in Malaysia

Ashley writes*

On April 1st 2022, a Memorandum of Understanding was signed between the President of Indonesia, Joko Widodo, and the Prime Minister of Malaysia, Ismail Sabri Yaakob, committing to improving the safety and protection of Indonesian migrant workers in Malaysia. This agreement came about after several reports and complaints were filed on the abuse of migrant workers. At the same time, Malaysia is experiencing a shortage in foreign labour due to government measures to protect locals during the Covid-19 pandemic.

How can we make sense of the contradictions facing migrant workers in Malaysia? How do Malaysia’s migration policies affect labor?

It is estimated that there are two million legal migrant workers and two million undocumented migrant workers in Malaysia, most of them coming from Bangladesh and Indonesia. In total, they account for 15% of workers — a similar share to Indians who are the third largest ethnic group in Malaysia.

This is hardly surprising, given that migrant workers have always been an integral part of Malaysia’s economic development model, especially during its transition from lower to upper-middle income. During the colonial era, Chinese immigrants worked in the tin-mining industry, while indentured Indians from British India worked in agriculture and transport. These early migrant workers contributed directly to the development of industries, infrastructure and as a result, the economy of Malaya, and later assimilated themselves to become Malaysians.

Malaysia’s businesses are still heavily reliant on cheap migrant workers.

Migrant workers are subjected to abuse, discrimination, poor living conditions and other human rights violations. Many are forced to work off their debts resulting from trafficking, face risk of sudden termination, arrest or detention. Since they are also assimilating, it is important to help migrants integrate in harmony with the local population.

Bottom Line: In Malaysia, migrant workers are vital for economic development but their treatment is detrimental for social development. My research seeks to investigate active labour migration policies as a way of understanding this co-existing relationship between economic and social development in Malaysia.  

* Please help my Economic Growth & Development students by commenting on unclear analysis, alternative perspectives, better data sources, or maybe just saying something nice :).

Author: David Zetland

I'm a political-economist from California who now lives in Amsterdam.

One thought on “Labour and migration in Malaysia”

  1. Hi Ashley,
    I really enjoyed reading your blog post. I did not know anything about Malaysia’s economy and its reliance on migrant workers before. Thus, your synthesis of the history of migrant labor in Malaysia and the current situation with its economic benefits and social challenges provided a good overview of the situation.
    Given the limited word count of the blog post, I am assuming that you will look into many more aspects in more depth for the final paper. For example, it would be interesting to see the development of migrant labor in Malaysia’s economy over a more extended time period than the comparison between 2010 and 2019 in figure 1. It might also be interesting to look at countries that have/had a similar dependence on migrant labor and how they dealt with the related social challenges. Maybe there are countries that implemented successful policies to protect migrant workers and could serve as role models for the Malaysian case. Finally, I am wondering whether Malaysia is looking to reduce its dependence on migrant workers with increased development.
    I think the case you chose has a lot of potential for analyzing the impacts of migrant labor on development and I am looking forward to your presentation.

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