Foreign workers in Malaysia compete with local workers for jobs, especially in low-skilled sectors. Foreign workers are attractive to employers because they accept lower wages without demanding additional rights. This displacement of local workers by cheaper foreign labor has contributed to unemployment among Malaysians. The document examines the root causes of unemployment in Malaysia and how an over-reliance on foreign labor has negatively impacted the development of skilled local workers and economic transformation programs. Recommendations include providing more educational opportunities for rural Malaysians, regulating the number of illegal immigrants, and setting minimum salaries for foreign workers.

1. Foreign Workers as Competitors for
Local Workers
prepared for:
Dr. Ahmed zubir bin Ibrahim
prepared by:
Abdirahman Dahir Jama (818374)
MAY 23TH
2015

2. INTRODUCTION
 Unemployment happen when people are able and actively seeking to
work but unable to get work. This will eventually resulted in the loss of
incomes, production and human capital of a nation. High level of
unemployment usually occurs during the economy recession where labor
supply exceeds demand from the employers.
 Unemployment rate is used to measure the underutilization of labor
resources because it signifies the percentage of labor force that is
unemployed but are willing and actively seeking for work. Unemployment
rate provides a precise measurement which was assured by The Bureau of
Labor Statistics.

3. CONTINUE...
 Unemployment rate provides a precise measurement which was assured by
The Bureau of Labor Statistics. However, there are several factors that affect
the unemployment rate in a nation such as company downsizing, merger or
acquisition, changes in technology and foreign competition, and job
outsourcing to other nations.
 During our assignment we will focus on small part of unemployment in
Malaysia particularly the low level sectors which there is more foreign
workers, we will examine why, why the locals are not more in here, there
will be interviews both from the foreign workers and un employed locals,
there are locals who are in need to work in these areas of law level sectors
in Malaysia but we will find out the exact root causes of this.

4. ROOT CAUSES
 According an economic paper of University Malaya published in 2012
implies that there are more for foreign workers in the Malaysian market and
became more competitive by being a cheap labor where the foreign worker
does not demand more about the salary or cannot dictate the rights that the
local worker might demand such high wages, due to the illegal foreign
immigrants to the country seeking jobs made possible that employers to
have cheap labor in which they can decide for them the amount of salary
which is very less equivalent to the work, and the condition of the job.

5. CONTINUE...
 The foreign immigrants in Malaysia are attracted by the low unemployment
rates and excess demand of labor force in Malaysia. As well particularly
those immigrants come from Indonesia, Pakistan, Bangladesh, Iran, Yemen,
Philippines and others. Malaysia is facing the reality that the increasing
numbers of foreign workers give some drawbacks toward the competition
of labor market in Malaysia.
 According to Arif (2009) Says “The trend of foreign workers increase in
Malaysia is considered as stimulator for the local people to transform them
from labor intensive industries orientation toward hybrid modeled skilled
industries, like bank and finance sectors, computers and technological
sectors, research and development areas and public instrument and
infrastructure provision services.”

6. AREAS ARE HOSTED THEM
 This shows that the capacity of foreign workers particularly those
from the Asian countries are holding major portion of the
Malaysian labor force market, during our observation particularly
in the areas in Kedah we have realized that most of the foreign
workers in this sector are in Restaurants, construction, carwash,
petrol station and others.

7. DEVELOPMENT OF THE ISSUES
 Unemployment in Malaysia is one of serious issue that have been focus by
government in order to accomplish a mission of 2020 to be one of develop
country. Malaysia is facing the reality that the increasing numbers of foreign
workers give some drawbacks toward the competition of labor market in
Malaysia.
 Kedah is part of Malaysian and actually can be categorize as rural area states
whereby majority of the populations in Kedah rely on agriculture sector like
Paddy and rubber as main contributor to the income. Since Kedah is one of rural
area, then unemployment cases among the lower income or unskilled people
need to be seriously discussing in order to curb this issue.
 As a rural area status, unemployment cases in this state shows the increase of
rates whereby as refer to the Malaysian Department of Statistics, the rate of
unemployment in Kedah shows that in 2011 the rate is about 26.8 and it was
decreased by 23.6 in 2012, followed by 20.6 in 2013 but the rates was increase
in 2014 by 3.9 percent that make the rates become 24.5 percent.

8. CONTINUE....
 In additions, current phenomena in Kedah is most of company like construction,
industry, mall and other related more interest to the migrant worker compare to
the local and it is actually create a problems that related to the higher of
unemployment cases among the local people because they need to compete to get
a job. As refer to the National Economic Advisory Council (2010), the talent based
of workforce in Malaysia has lagged behind the standard of high income nation.
 On the other hands, National SME Development Council (2012) reported that,
employer’s over-reliance on unskilled and cheap foreign labor has led to
inadequate growth of skilled workers in labor market. The employer stated that
hiring migrant worker can save the cost compare to local people whereby migrant
worker mostly not demand on high salary and just rely on company rules also can
perform well compare to local people.

9.  Malaysian Economic Transformation Programme (METP) is a thorough effort
to make Malaysia develop into a develop country when reach 2020. This really
is other initiative for Malaysia to possess high earnings in economy sector by
the year of 2020.
 Besides that, this effort has exactly the same line with the National Economic
Model (NEM). Furthermore, desire to of the program is to maneuver and
strive for the Malaysian economy to become one with high GDP, per-capita
and well distributed income and astounding quality growth in 2020.
 METP really wants to enhance and encourage Malaysia to advanced-nation
status with completeness and sustainability by eight Initiatives of Strategic
Reforms. The eight strategic reform of initiative are called re-fresh and
energies the Malaysian private sector, developing a competitive atmosphere
of national economy, enhancing the energy of public sector, making the
transparencies of market and direct marketing affirmative action.
Malaysian Economics Transformation
Program 2020 (METP Vision 2020)

10. CONTINUE...
 In conclusion, there are four main points which can be considered as the
main parts in this project paper that led to be elaborated in each
subsections of the part above. Those four important part are as follows (i)
unemployment rate fluctuations pattern in Malaysia during last one
decade (ii) the different factors which fluctuates unemployment rate in
Malaysia during last one decade (iii) the outlook of Malaysian job market
during next 10 years and the development of Malaysian Economics
Transformation Programme (METP) (iv) how damaging is the matter of
unemployment in national economy of Malaysia.
 The first concern is all about fluctuations of unemployment rate in
Malaysia within last one decade, the paper shows that the fluctuations of
Malaysia unemployment rate can be viewed as stable and starkly which
laid down within the relevant range of 3 to 4 % from 1998 to 2012.

11.  The stable and positively stark fluctuations of Malaysian unemployment are influenced
by the next main points which called some factors including the presences of foreign
workers, dynamics of population amount, the increase and trends of unemployed
graduates and the dynamics of inflation-economic growth trend in Malaysia.
 the third main point is all about the outlook of Malaysian job Market next ten years are
extremely diverse, competitive and prosecuting individuals to function as the part of
creative and innovative economic grower to attain the objectives of Malaysia Economic
Transformation programme.
 the fourth essential point discusses about the significance of unemployment as
damaging issue in national economy of Malaysia. As known that unemployment is
considered as damaging issue to the national economy because high unemployment
may reduce the aggregate income and provide the negative affect the government.
 Finally, analysis of the four main parts about dynamics of unemployment in Malaysia are
supplied with the true facts, elaborations of proof, analysis of the in-depth problems
preceded by the true examples and analogies that ease people to know easily.
CONTINUE...

12. CONCLUSION
 As a conclusion, unemployment rates among the local can be reduces with the
increase of skill development in every local worker together with the reducing of
foreign worker in Malaysia especially in suspected area like car wash, construction
site and mall as well as the place for the un skill worker. Limit and curb the foreign
worker in construction site need to be emphasized by the government and
contractor itself because the use of foreign workforce has caused several problems
on productivity of the Malaysia construction companies.
 The first of these is the low initiatives to adopt more productive and modern
method of constructions. Next, many of these foreign workers do not have enough
construction experience, thus resulting in low productivity and poor quality of
works.
 Communication barrier between the employers and these foreign workers also may
lead to the misunderstanding which will decrease the level of work done of such
project. Our government also need to amend on the foreign worker act in order to
give prioritize for the local worker to grab any job vacant.

13. LIMITATTIONS
 During our searching for interviewing a foreign worker became of the obstacles
we have faced due to few reasons, one that is; a foreigner might immigrated
illegally in the country and afraid to be known by the authority, or sometimes
as result one of the restaurants in the UUM the employer refused to give us
permission for interviewing his foreign workers, due to afraid from exposing
the feelings and the amount of salary that employee receive from the
employer

14. RECOMMENDATIONS
 Based on the observations of this issue we have acknowledged that even the
locals might not very much interesting working this hard condition works, like
constructions as long there are more expectations from their government, by
acquiring scholarships or loans in educations which they might realize that this
opportunity could brought them better life than the hard working conditions.
 Our recommendation will suggest that the Malaysian Government are required
to give more opportunities to those living in the rural areas in terms of
education with quality for improving their live .
 The Malaysian government should put much attention the illegal immigrants
from abroad particularly those seeking to have the jobs for locals from the
neighboring countries.
 The government should also emphasize in its’ policy of setting specific amount
of salary for the legal foreign worker in order to be avoided for the dictating
right of the employees by the private employers.

15. The End