Thursday, March 19, 2009

Dodgy thinking dogs levy policy

Part of the stimulus package involves the doubling up of levies on foreign workers. The idea, quite obvious really, has several prongs. The obvious one is to enable Malaysians to take over the jobs. The less obvious one is to compel Malaysian businesses and enterprises to ratchet up the value chain by introducing some trite innovations and processes.

Here, we have a call made by the MCA Youth Chief (who also doubles as Deputy Minister of Education) Wee Ka Siong, that the Government (that he is a part of) should reconsider its decision to double the levy on foreign workers as this may end up hurting businesses.

From The Star, “MCA Youth is in support of such a move if it actually proves to help retrenched locals but our feedback is that despite advertisements, many are still reluctant to work in restaurants or factories,” said Dr Wee, adding that the movement had prepared a memorandum to be presented to Deputy Prime Minister Datuk Seri Najib Tun Razak.

I have some observations on this:

First, what happened to the principle of collective Cabinet responsibility. Even a Deputy Minister should be subjected to this constitutional provision. This is breaking the ranks. I suppose this is one dodgy version of democracy as understood by the MCA Youth Chief.

Second, this smacks of crass pandering to lazy and overweight businesses that are used to years of cheap foreign labour. That a member of the ruling coalition and, a Deputy Minister to boot, should support this myopic call only demonstrates the paucity of genuine visionary political leaders in this country.

Third, as I understand it and, I may be wrong since my understanding is based on official statements and speeches and what is reported in the Mainstream Media (MSM), the Second Stimulus Package is largely predicated upon Malaysians working to increase efficiency. What is the efficiency of reverting to the usage of cheap and unskilled foreign workers?

Fourth, which dovetails from the preceding third point, the eateries, hawker stalls, kedai mamak and warungs should move towards some form of self-service principle. And, factories that are labour-intensive need to either close down or increase their automation processes (the loans are available under the Second Stimulus Package). In due course these measures will result in a demand for higher skills (and, hygiene, in the case of the restaurant and food sector). This means better pay. This will attract Malaysian workers.

Presently, the archaic, unsafe and unhygienic workplaces in Malaysia are suitable only for cheap, unskilled foreign workers. No Malaysian who is used to a higher standard of living and sanitary conditions (I hope) will step into the industrial and F&B cesspools.

So, why, YB Wee, are you calling for a review of the policy to reduce Malaysia's dependence on unskilled foreign workers?

Why do you insist on championing the cause of inefficient Malaysian businesses?

Do you not understand that the Second Stimulus Package offers an opportunity for Malaysian businesses to restructure their erstwhile inefficiencies and ratchet up to the next few levels?

Or, do you doubt the effectiveness of the Second Stimulus Package?

8 comments:

Jed Yoong said...

hi,
i think perhaps they should see how spore encourages snr citizens to work in food courts, etc
the other alternative is of course student labour, ppl working while studying, etc
why do we need a bangladeshi who can't speak local languages serving me food?

Anonymous said...

I fully agreed with your view. However I will just like to add my experience with local staff, we actually have a situation of the egg comes first of the chicken comes first here.

I employed a local staff on 1st march. The employment letter stated that the staff should not take leave in the first few months of employed. Less than ten days after starting work said staff asked for two days leave to attend a wedding in home town. After discussion it was agreed that she should only go on 2 half days leave. I think that is very leanient on my part. On the day she is supposed to return to work. No show no call. When we managed to contact her, she said that she is still in hometown and is not feeling too well. She will be back two days later!

Maybe that is why employers are reluctant to consider local staff? This is not the first incidence I encounter and just maybe other employers faced the same problem. Or am I just unlucky?

So the question is should we take local staff and faced this problem or should the local staff change their attitude before the are employable? Chicken first? Egg first?

de minimis said...

Hi Jed

Good of you to drop by.

Anon 11.45

As an employer, I, too, have experienced the exasperation of dealing with poor staff. But, these types of staff exist anywhere. Just find a way to get rid of them and hire a better one. That is the way things work. We just have to realise that we can't just take the easy way out and just grab cheap foreign labour who may be better in attitude (because they live a harder life) but they aren't Malaysian. We have to draw the line somewhere. It's for our own good.

Anonymous said...

de minimis,

Yr main point is Malaysian first, no?

But then the less obvious question of 'to compel Malaysian businesses and enterprises to ratchet up the value chain by introducing some trite innovations and processes.' becomes a sticky one, as mentioned by anon11:45.

Do U realize that our inherent structural issues as U so succinctly mentioned in yr last write-up has cultivated a lot of 'little emperors' with very poor working attitudes? This symptom is easily observed in most of the govt departments & many of the GLCs (surprised?).

My own experience with a few MNCs indicates that what U have suggested to Anon 11:45 is easier said than done.

If done to the extreme there will be SOMEONE(guess who) crying for boycott & bloods

Many MNCs have NO CHOICE but just let it be, because of the political & business implications.

I'm all for M'sian first & better business efficiency. But at the current economic environment, cost cutting is the last resolve for some of the company's survival. It means less pay more works for EVERYBODY. Can some of the pampered M'sians take the cut & face the challenges ahead?

Judging from the long queue of people to apply for limited govt posts, even knowing the pay is low, that should mean something about their working attitudes.

Job safety? ya-loh! More time for Shaking-leg & pushing-paper R actually the FINAL guiding criteria! Job efficiency? What's that?

This should be part of the structural changes that U r looking for! Easy? NO? Then we R back to chicken-&-egg problem, again.

gwlnet

Raison D'etre said...

The sheap labour route in being competitive has long deserted us ever since Vietnam and China came up with much, much lower threshold.

In my place of stay, you can literally see tens of young foreign women who I assume are working at factories somewhere: this assumption given they were offloaded every morning by factory buses.

What I don't see however are Malaysian young factory workers: when I worked part time at a factory sometime back, the age grouping was already in the 30s 40s bracket.

The young Malaysian women are getting more cleverer and skilled while the men are either dropping out to become Mat Rempits or going the sissy route and becoming somebody's toyboy.

Of course I am exagerating here. :)

walla said...

Food for thought?
http://is.gd/o9hX

(& yo, satd, thanks!)

de minimis said...

"...in Malaysia defensive strategies are still
very common, despite pressing labour shortages and rising wages. The prolonged dependence
on defensive labour strategies was made possible by relatively lenient foreign labour policies
and the possibilities for evasion, as Government turned a blind eye to diversion of levies onto
foreign workers and general exploitation of this rather vulnerable group (most overtime work was in fact carried out by foreign workers). On the contrary, in Singapore, many of these routes were quickly cut off by the Government."

Thanks walla. This is more than food for thought. It is a usful study to reassure the likes of YB Wee and the labour-intensive industries that there are many ways to "skin a cat" (with sincere apologies to animal lovers for the use of the unfortunate idiom).

walla said...

We have missed too many opportunities in the past to shape our human capital strategies for a future all would have intuited.

However, each time the opportunity arrived, the policy-makers decided to take the easy road out or were reactive in an ambivalent manner. Too little, too late and too skewed to certain interests.

It can't be because they didn't know since all debates, discussions and comments in blogs, seminars and other places in and out of the country have always come down to one conclusion - if we don't continuously upgrade our human capital in order to ratchet up the value chains of our products and services industries, and that includes public services, then we will always be sliding down viz-a-viz other emerging countries. And when that happens, all policies which lead to Putrajaya will mean nought because if you don't expand the economic pie, there is no distribution of wealth.

Everyone knows the real situation, including the policy-makers reading this.

The only things holding up as door stoppers to keep reality from slamming into our faces are oil and commodities.

The electrical and electronics sector which was a low-value major employer has hollowed out with the spectre of massive unemployment looming big. There is no comfort from arguing that it is also happening on the other side of the world when you can see with your own eyes your neighbor sitting forlornly at the porch with nothing to do.

Even the garments industry of that study is under heavy pressure; in the past we were second to China in the world in the .kg output per garments worker; now India, Vietnam, Thailand, Indonesia and even Sri Lanka have emerged as strong contenders. The study noted that our garments producers under-utilize their computer-aided design tools. Much like our auto-parts makers, to add.

You know why i selected that industry. Like some good things about us, for example surgical gloves, it came out from nowhere as initiatives started by a few enterprisers in the private sector. It has high volume for export markets with competitive pricing. It provides an example of how foreign workers are used to inject business viability. But having said all that, it could also have had value-chains, for instance use of new types of raw materials, techniques like mass customization facilitated by information technology, even branding based on hauteur designs. But the policy-makers, industrialists and shareholders just didn't want to seriously see beyond the next quarter's performance and once you get into that sort of frame of mind in order to be just one step ahead, it's easy to ignore the blue oceans one must create to swim in which could have provided stronger palliatives in a changing global situation that we know will sooner or later hit shore.

Today's meltdown is going to be yet another missed opportunity. The meltdown is loosening the sands upon which the foundation of wealth of this country is built.

One suspects the blogger knows this too well. And there's a difference today from how it was for us before. Today we stand at the precipice of being a net oil importer. That means when we cross the line, there will be a new net energy bill which will have to be reflected in pricings whether to local consumers or to export products. That's going to make poor people poorer and exporters even less competitive. Secondly, the big stimulus packages are debt-creators. That will push down our sovereign rating, increase cost of loans, and build debts that decreasingly competitive wealth creators will not be able to service later. Multiple-whammies.

I know we are late. But if, as the blogger hopes, we don't start, we won't see the finishing line. We may however comfort ourselves we will finished. And that's an old idiom.