KUALA LUMPUR (April 22): Migrant workers serve a complementary role in Malaysia's labour force, enabling more Malaysian employment, according to the World Bank. 

To illustrate this, World Bank lead economist for Malaysia Dr Apurva Sanghi said that every 10 migrant workers entering Malaysia result in an additional two Malaysians being employed based on data from 2010 to 2021. 

“One of the main reasons for the perception of an adverse relationship between immigration and labour market outcomes of Malaysia is the lump of labour fallacy or the - false - belief that demand for labour in an economy is fixed, or there is a fixed number of jobs in an economy,” Apurva said during a media briefing for Part 1 of the World Bank’s April 2024 Malaysia Economic Monitor (MEM), entitled “Bending Bamboo Shoots: Strengthening Foundational Skills”.  

“This would mean the employment of migrants would decrease the employment opportunities available to Malaysians. 

“That said, it is referred to as a fallacy because an increase in labour demand - for migrant workers or otherwise - translates to an increase in aggregate demand in an economy through an increase in consumption by these workers, subsequently increasing the demand for labour further,” he explained.  

Apurva underlined that Malaysia has evolved into a more educated nation, where its citizens are increasingly occupying mid- to high-skilled jobs while jobs at the lower end of the spectrum are occupied by migrant workers. 

In this way, he said migrant workers in essence are playing a complementary role in the Malaysian labour market.

Malaysia faces rising concerns of underemployment, brain-drain issues  

Meanwhile, Dr Yasuhiko Matsuda, the World Bank country manager for Malaysia, emphasised that Malaysia needs to strengthen skills and create more and better job opportunities to mitigate the rising issues of underemployment - where individuals are working jobs below their qualification or skill level.

He highlighted that “companies are not generating enough jobs for individuals who have been trained at a certain skill level”, leaving them to settle for jobs that require fewer skills. The solution, he suggests, is to encourage companies to create more jobs.

Furthermore, Yasuhiko said "despite individuals possessing formal credentials or university degrees, companies often find that they lack the desired skills during interviews". Therefore, he said there is a need to focus on improving the quality of education.

Echoing the sentiment, Apurva suggested that the starting point should be strengthening skills and creating more and better jobs. "Part of this process involves better aligning what is taught in schools and academia with industry demands," he noted. 

Asked about the persistent labour productivity and brain drain issues, Apurva noted that increasing productivity is essential to address the brain drain issues in Malaysia.

He explained, “How do you increase productivity? One approach is to start with increasing investment. Notably, investment in GDP in Malaysia has been declining. During the Asian financial crisis, it used to be about 30%, but now it’s down to just below 20%”.

He added that another key to increasing productivity is to strengthen foundational skills.

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