Penting Foreign Problem

8/14/2019 Penting Foreign Problem

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CHAPTER 2

LITERATURE REVIEW

2.1 Introduction

To date, a number of studies have been conducted on foreign workers issues

and they have covered diversified aspects of it in various ways. Although an issues

in the past, it has remained contemporary. Accordingly there are some studies

which focused more specifically on the issue. In this chapter, it shall review some

of the important studies to provide a very brief idea about the issue of foreign

workers in construction industry.

2.2 Why Foreign Labour in Contruction Indutry

In the earlier days, most construction workers in the country were locals who

were recruited through the apprenticeship system (ong, !""#$. In this system, a

foreman, usually skilled, will recruit workers within his community, as the need

arises. %e is responsible to train the workers, including arranging the worksite,

material and se&uence. 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.

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In the seventies and early eighties, nearly " percent of the foreign workers

were concentrated in the construction sector because the country was e)periencing a

construction boom (*hosh, +''$. -uring this construction boom, there was a great

influ) of foreign workers, predominantly from Indonesia and later, workers from

yanmar, /angladesh and Thailand. ost of these workers came in either illegally

or overstayed their visit pass. A0ian (!""1$ 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 e)pansion has to opt for foreign worker.

According to another source, the alaysian construction industry has relied

on foreign work force since early +'"s (Ahmad, +''2$. 3oreign labour started withthe plantation sector. 4wner argued that they no longer could find local workers

willing to work in their estates because of the better salaries and working condition

in the manufacturing sector. 5oon, the construction sector followed the suit. ith

this influ) of the foreign workers, local apprentices shield away from this trade as

they found working alongside these illegal workers not conducive. 3urther the trade

was branded as #-6s 7ob that are -irty, -angerous and -emeaning.

At about the same time, local skilled foreman and workers were lured

overseas to countries such as 5ingapore, Taiwan and 8apan where they were paid a

much more higher salary for their skills. This is why the 9onstruction Industry was

left with such a high proportion of foreign workers.

2.! "aic #ata on Foreign Labour

Today, it is obvious that the foreign workers are part of alaysian society.

The number of foreign workers in the country can only be estimated. alaysia in

recent years has absorbs large numbers of foreign workers to work in low:paying,

low skilled fields.

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According to an ;conomic of

the total labour force (+",?+1,'""$ in !""#. 3oreign labour has become an integral

part of the alaysian labour forces, particularly in the construction industry. There

are many estimates of foreign workers in alaysia but the data on the number of

foreign workers have to be interpreted with caution because there is no foolproof

study or survey giving e)act number.

A. @avamukundan (!""!$ indicated that as at 8uly +''', the total number of

registered foreign workers according to the government was +?,+1? of whom #>

were Indonesians, +'> /angladeshis, #> 3ilipinos and the remainder from other

nations such as India, yanmar, akistan and 5ri Banka. %owever, all thealaysians are aware that the actual number of foreign labour far e)ceeds this

number. It is estimated that appro)imately +.? million foreign labour (both legal

and illegal$ work in alaysia.

It is also estimated by (Ames, !""+$ that there were over !#",""" foreign

workers entered the country in !""", mostly from Indonesia and the hilippines and

others source include 9hina, /angladesh, yanmar and Thailand. These workers

are normally employed in 7obs critics6 label the # -6s:dirty, dangerous, and

demeaning. In general, low:skilled foreign workers are employed in positions that

most alaysian simply refuse to do.

The %ome Affair inistry, -atuk A0mi Chalid noted that alaysia had +.!

million legal foreign workers but estimated that there was one illegal foreign worker

for every legal worker (The 5tar, " ay !""1$. /esides, %uman


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may land at over seventy ("$ places in alaysia. There were an estimated +.!

million illegal workers in the country.

According to The 5tar ("? August !""1$, it is estimated that the number of

foreign workers could rise to as high as five million by !"+" 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.$ Caue In%&uencing the In%&o' o% Foreign Labour

hy foreign labour find alaysian attractive to work inD *enerally,

alaysia has a tolerably pleasant moderate climate and the people are friendly, co:

operative and helpful. olitico: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 alaysia is a heaven for

foreign workers.

In addition, alaysia is attractive because of its relatively better economic

performance and prospects for foreign labour. -ue to greater industriali0ation and

urbanisation in the economy there has been a massive rural:urban migration drift,

which in turn has led to an acute shortage of workers.

As a fast developing and progressive nation, alaysian holds a better

prospect for the prospective immigrants. The demand for labour has been increasing

continuously in tandem with economic progress. A. @amukundam (!""!$ also

indicated that the accelerated economic development programmes and the sustained

high economic growth rates in alaysia caused the influ) of foreign workers to

meet the increasing demand in the alaysian labour market.

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2.$.1 In%&o' o% Foreign Labour in Contruction Indutry

any causes have been responsible for the inflow of foreign workers in

alaysian construction industry. Among the causes of the inflow of foreign

workers in construction industry are as followE:

a( Contruction )ob *oor i+age, *oor 'or-ing condition and &oca& *re%er

eaier )ob

Bet6s be realistic, alaysian prefer easier 7ob, foreign labour are mainly in

the lower end, heavier kind of 7ob. 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 7obs.

3urthermore, the working condition in construction sector is very poor. The

poor image of construction industry such as absence of 7ob security, poor

management, insufficient promotion, and lack of opportunity for career

advancement make locals decline to 7oin this sector.

b( Contruction )ob -no'n a ! # )ob

Another reason why the alaysian construction industry felt the need for

importing workers from abroad is due to foreign labour do what has come to be

known as # -6s works :dirty, dangerous, and demeaning in alaysian that local

alaysian shy away from this type of 7ob. They are generally not interested in the

7obs currently held by foreigners.

3urthermore, 7ob in the construction industry are becoming unpopular among

the working population in newly industrial countries as they are more risk:prone

than others 7obs. The accident rate at construction work place is much higher as

compared to other industry

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c( Lo' 'age tructure %or contruction )ob

The locals shun employment in construction sectors also due to the wages

are deliberately kept low and low wages for high risk 7obs. 5ome companies are

deliberately keeping salaries low to encourage a high turnover of locals and

convince the authorities to allow foreign labour.

According to Fehadul et al. (+'''$, the uncontrolled presence of foreign

labour plays a significant role in maintaining the low wages levels in construction

industry, for instances very few local labour want to work in construction industry.

d( Higher education &e/e&

;&ually important is the fact that with higher education levels, nowadays, it

is too common for local young generation to study until enilaian enengah


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and only choose workers who are not only ine)pensive 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

ob7ective is to earn as much money as possible within a short span of time. ichael

(!""+$ also stated that newly arrived labour willing to accept lower wages and less

attractive conditions. The foreign labour paid less than local citi0ens even if they

perform the same 7obs.

TG9 president Fainal


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again on centre stage. The following are the various impacts of foreign labour in

construction industryE

a( Cu&tura& Po&&ution

ost foreign workers are peaceful. They want to earn money to send home.

In most cases, concern over foreign labour is linked to an)ieties over what some

have characteri0ed as cultural pollution and over foreignisation (einer, +''"$.

They may change the cultural and social orders of the normal practice of the locals

in construction industry.

b( ocia& Prob&e+

Begal 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

alaysia.

According to Tey (+''$, as shown by unpublished police records at the

police head&uarters in /ukit Aman, between +'? and +''+, foreign labour

accounted for between +1.> and +.!> of all murders committed in the country.

The figure for gang robbery was between #!.> and 1.!>.

c( Po&itica& tabi&ity

The inflow of legal and illegal workers poses many implications on political

issues. The local population is fearful for the country6s harmony, security, social,

economic and political stability. The locals are fearful of becoming a minority

group unable to e)press views, influence or control the country politically if the

influ) of foreign workers on such large scale.

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3oreign 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 alay reserve land.

/esides, the presence of the illegals create problems also since illegals are not

constrained by rules and regulations and are free to infiltrate into any 7obs so long as

the employers are willing to accept them.

They also make inroads into 7obs not designated for them, thus putting them

into direct competition with locals. The *overnment should be strict about

repatriating foreign workers who are not needed because they are taking 7obs away

from alaysians.

%( Foreign &abour caued 'or- de&ay

9onstruction industry is labour intensive industry, it depends on large

number of foreign labour. According to ;conomic


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g( Lo' *roducti/ity and ua&ity due to ti+e conu+ing to train ne' 'or-er

The reduction of the duration of temporary work permits for foreign workers

from si) or seven years to only three years had caused deterioration in the poor

&uality of workmanship and low productivity. 3oreign labours that have had three

years6 e)perience may be replaced by those do not have prior construction

e)perience, thus resulting in low productivity and poor &uality of work. 5ome of

them were not able to cope with new e)perience of working on large:scale pro7ects.

A0lan (!""1$ also mentioned that the lack of &uality 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 ine)perienced. That means the employers have to spend time

and resources to train these new workers. As indicated in aster /uilder (Cok,

!""#$, upon commencement, the foreign labour would re&uire another ! to # months

to go through an orientation or learning curve period before they become productive.

3urthermore, on:the:7ob training will take around seven to eight months then

only the foreign workers will begin to contribute to company. To some e)tent, the

training was difficult, as most foreign labour were paid daily wages and were

reluctant to undergo training due to loss of pay.

h( Hea/y e3*ene in the recruit+ent *roce and &ong *er+it *roceing ti+e

alaysia introduced harsh new immigration laws in August !""!, the

construction industry is suffering from an acute shortage of foreign workers

throughout the nation. As a result, this has caused construction activities to be

delayed albeit contractors trying to the best of their endeavours to recruit new

workforce. The central problem now appears to be the long processing time taken

by the authorities to grant the foreign work permit (Bim, !""#$. 9ontractors

securing new 7obs have problems mobili0ing new workers on time, due to this long

work permit or recruitment process.

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As indicated by Tey (+''$, the legal importation of foreign labour was and

still time consuming and costly. Cok (!""#$ also summarised that based on current

e)perience, it takes about !:# months on a best case scenario to go through the entire

administrative process, commencing from obtaining a work permit from the ministry

of %ome Affairs to the foreign workers gaining physical entry into alaysia to

work.

Therefore, it is not cost effective to send foreign workers home after 7ust

three years because of the heavy e)penses in the recruitment process. eanwhile,

the process to bring in foreign workers is tedious and time consuming. 3urthermore,

a lot of cost is involved in medical e)aminations, 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.

i( Acco++odation *rob&e+ %or %oreign &abour

Accommodation for foreign labour was problematic, if contractors do not

have any more new 7obs after completion of their e)isting work. It is now apparent

that due to the uncertainty of pro7ects and the short:term nature of most construction

pro7ects, contractors find it difficult to maintain long:term employment for their

workforce once they are imported into country.

As mentioned by A0lan (!""1$, there was a burden for the construction

companies to maintain foreign construction labour both financially and

administratively when pro7ects are completed, and=or during the period where they

have no new pro7ects.

2.0.1 o+e Poiti/e I+*act o% Foreign Labour in Contruction Indutry

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In recent years, there has been a huge cry that the foreign workers have

created enormous socio:economic problems in alaysia. %owever, it is not to deny

the positive impacts of foreign labour on economic issues. Assuming that there are

many problems the evidences (9han H oha, +''$ indicated that there are also

direct and positive impacts of the foreign workers.

The foreign workers have benefited in the income development. 3oreign

workers were immensely beneficial to the economy. This shows the positive

&uantitative contribution of foreign workers to alaysian6s economic growth. The

implications of foreign workers on the alaysian economy have been immense

especially since the late +'"6s (Fehadul et al., +'''$.

age structure is one of the significant e)amples. The uncontrolled

presence of foreign workers plays a significant role in maintaining lower wage

levels. This also indicated by 5idney (+''2$, foreign labour offer an unending

stream of cheap labour that can keep wages low and growth high.

*enerally speaking, foreign workers contribute to the economy by supplying

a cheaper labour force. As a matter of fact, foreign workers usually receive a lower

salary than local workers and the difference can help to maintain the decrease in

production cost. 4leg (!""!$ stated that the attracting cheap workforce means

cutting production costs, hence the production cost for construction development is

kept low which is an advantage in the foreign workers

alaysia, which have tremendous shortages of manpower in construction

industry, the importation of foreign workers could initially fill up the vacancies or

at least minimi0e the e)tent of manpower shortage. The supply of this additional

labour force fulfilled the urgent demand for labour which could not be met so

&uickly and at a cheaper rate6.

ore importantly the foreign workers accepted those 7obs which are not

often welcome by the local workers especially the construction 7obs that known as

!+


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#-6s 7ob. oreover, if we assume that the foreign workers are e&ually 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 alaysia is around five times in the manufacturing sector (*hosh,

+''$. If this is true, then there are sufficient positive value:added effects of foreign

workers in the alaysian economy.

2.4 Way to 5ini+ie the 6egati/e I+*act o% E+*&oying Foreign Labour

In all probability, it is belief that the demand for foreign labour is going to

escalate in near future in construction industry. 5o what should be the government

policies and strategiesD 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. %ow can this be doneD

-ue 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.

a( trengthening nationa& ecurity to reduce cri+e rate

The government is concerned about the influ) of illegal immigrants, which it

says has contributed to the crime rate. The influ) of illegal immigrants had created

various problems and was a threat to national security. The


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/esides, the authorities also plan to issue guidelines to employers to separate

foreign workersJ &uarters according to their clans and nationalities to avoid

bloodshed when tempers flare. The construction companies would be advised not to

put more than ?" workers in one kongsi or temporary village for construction

workers (@ew 5traits Times, +" 8une !""1$. This is to avoid the cases from

happening such as the armed clash involving some ?" men from two groups of

Indonesians in a 5elangor village.

b( 7o/ern+ent to tighten hiring ru&e o% %oreign 'or-er

The country is bringing in more foreign workers than needed by industries

and the *overnment has to plug loopholes that cause the oversupply. Therefore, the

government has adopted drastic measures recently to repatriate immigrant workers,

especially the illegal immigrants. An amnesty was given to all illegal immigrants

who voluntarily returned to their country by the end of 8uly !""!.

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 *overnment had

identified several measures to make it harder for agencies to bring in foreign

workers and to reduce country6s dependency on foreign workers.

Among them areE

+$ 5topping the system of supplying foreign labour through contractorsK!$


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c( Cut %oreign &abour /ia +ini+u+ 'age yte+


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Immigration -epartment ;lectronic Application 5ystem (I-;A5$, employers can

sign up and be linked to the department for easy and hassle:free application.

ith 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 re&uired to

register themselves with the department first before getting user I- and assword

for access to the online service.

Gnder the current manual submission procedure where much bureaucracy is

involved, it takes up to three months for approvals which will possibly causing delay

in mobili0ing new workers on time.

%( Loca& %irt *o&icy

According to alaysia ;mployment Act, the employer is prohibited to

terminate the contract of service of a local employee for the purpose of employing a

foreign employee. here an employer needs to reduce his workforce due to

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 (


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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.

9I-/ chief e)ecutive -atuk Abdul


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According to /A (!""1$, 9BA/ basically has the following functionsE

Absorption of surplus legal workers in the construction industryK lacement of absorbed workers with &ualified contractorsK

rovision of enhancement workers with &ualified contractorsK and

5upplementary recruitment of foreign workers to meet the needs of industry.

i( Indutria&ied "ui&ding yte+ :I"(

The government encouragement to all the employers to mechanise and move

into less labour intensive processes has not achieved the desired result. 4n the

contrary, the demand for the foreign labour is increasing by the day (Ahmad, +''2$.

The ma7ority 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 /uilding 5ystems (I/5$


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reduced and construction works focused on the use of the mechanisation and

prefabrication.

/esides, the construction world is now beginning to recogni0e the

advantages to be gained by integrating fabricated steel and precast concrete with site

cast concrete, much less labour is re&uired on building sites. This result in the

hidden cost of moving labor around tall or large buildings being reduced and other

collollaty costs such as catering, health and security being lower (eter, !""1$.

The government even stopped offering incentives to labour:intensive firms,

turning its attention instead to the development of strategic high technology

industries (


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improve the available training systems to cater for current and future needs. /esides,

special incentives must be given to employers and worker for retraining of workers,

so that they can ac&uire new skills, which will respond to changes in demand for

skills in the labour market as a result of changes in technology and organi0ation and

methods of work (I-A, !""1$.

2.; u++ary

The construction industry6s dependence on foreign workers cannot be

reduced in the short:term. %owever, a clear plan for gradual phasing out of foreign

workers over a realistic time frame should be put in place to allow industry players

to make the necessary ad7ustment gradually.

In the longer term, all players involved in the construction sector need to

seriously e)plore 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.

9oncerted efforts need to be put in place to promote higher buildability in

the industry through the promotion of new technology such as buildable designs that

allow the use of prefabricated materials to enhance productivity and efficiency.

alaysia must take cogni0ance of the e)perience in 5outh Corea where

despite its success in rapid economic growth and industrialisation, 5outh Corea has

never resorted to foreign labour (Ahmad, +''2$. 5imilarly 5ingapore6s dependence

on foreign labour has come in so easily, our dependence on them has become more

acute.

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Penting Foreign Problem