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Plan for foreign workers’ levies fund a positive move

The roads travelled for work: Women migrant workers in Singapore and Malaysia - UN WOMEN GALLERY/FLICKR

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By Mohd Sheriff Mohd Kassim

I heard the treasury secretary general Johan Merican saying, in a recent Malaysian Economic Association forum on Budget 2024, that the government is planning to introduce a tiered levy system for the employment of foreign workers.

Employers who want to employ more foreign workers will be required to pay a levy for their additional foreign workers. The more foreigners they employ, the higher the levy fee.

The fees collected by the government from the levy will go into a fund. The fund will be ploughed back into the private sector and used to provide financial support to companies to encourage them to introduce automation in their production processes.

The fund can also be used to train their workers so that with higher labour productivity, companies will become less dependent on human labour and therefore they have less need to import foreign workers.

This levy system is a good initiative to reform the labour market to enable higher wages to be paid based on productivity growth.

We should welcome this levy system as it will help to push companies, especially small and medium-sized enterprises, into automation, thereby reducing our heavy reliance on imported labour.

There are too many foreign workers in the country, and as their wages are low, the whole wage structure at the bottom of the labour market is kept depressed.

The PM in his Budget Speech to Parliament last Friday showed he wants wages at the bottom to go up in the country so that families from the bottom 40% of households can have a better life.

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As he said, for a country to have more economic justice, wages in the economy must go up to reflect a more equitable distribution of wealth.

The PM sounded like he would consider raising wage levels for government employees also, especially those in the lower salary grades. He said there would be a review of the government salary scheme, but no date was mentioned when the salary review start would start.

The Budget should provide funds for civil service departments to use automation and modern technology in their work processes to make them more efficient in delivering counter services with less use of clerical manpower.

With higher productivity, the civil servants will contribute greater strength to the economy, thereby justifying their higher salaries.

Tan Sri Mohd Sheriff Mohd Kassim is a former treasury secretary general

The views expressed in Aliran's media statements and the NGO statements we have endorsed reflect Aliran's official stand. Views and opinions expressed in other pieces published here do not necessarily reflect Aliran's official position.

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