Migration, Automation, and the Malaysian Labor Market

Investment Rating - The report does not explicitly provide an investment rating for the industry Core Insights - Malaysia is on track to achieve high-income status by 2025, driven by rising educational attainment and a rapidly aging population, which raises questions about the future role of migrant workers in the economy [5] - The 12th Malaysia Plan aims to reduce dependency on low-skilled migrant workers, promoting local participation and automation as alternatives [5][20] - The employment of low-skilled migrant workers is linked to lower productivity and wage levels, which may deter innovation and the creation of high-skilled jobs [5][9] Summary by Sections 1. Introduction - The Malaysian population is becoming increasingly educated, with over 40% of individuals aged 25 and older holding at least a post-secondary education [5] - The aging population necessitates the utilization of all labor sources, including women, youth, and migrant workers, to sustain economic growth [5] 2. Overview of Malaysia's Migration Policies - Malaysia employs a two-tiered work permit system for migrant workers, distinguishing between low-skilled "foreign workers" and high-skilled "expatriates" [11] - Low-skilled workers earn a minimum wage of RM1,500 per month, while high-skilled workers have varying salary levels based on their employment pass categories [11] 3. The Role of Migrant Workers in the Malaysian Labor Market - The share of migrant workers in the labor force has declined from 15.4% in 2013 to 11.6% in 2022, with a significant concentration in low-skilled jobs [28] - Migrant workers make up 44.7% of total employment in low-skilled jobs, while their share in mid- and high-skilled jobs is significantly lower [28] 4. Potential for Automation - The report highlights a generally positive relationship between the employment of migrant workers and the employment outcomes of Malaysian workers, with migrant workers more likely to perform automatable tasks [9] - The adoption of automation technologies is expected to have a substantial impact on Malaysian workers, given their larger share in the workforce [9] 5. Employment Landscape - The structural transformation of Malaysia's economy has led to a decline in agricultural employment from 58% in 1957 to 10.3% in 2021, with a shift towards services [22] - High-skilled jobs accounted for 70% of jobs created between 2013 and 2022, while low-skilled jobs saw a negative growth rate [24] 6. Migrant Worker Demographics - The majority of migrant workers are younger and less educated than Malaysian workers, with 67% having primary education or less [38] - The share of migrant workers aged 15 to 34 is 71.5%, contrasting with 47.3% for Malaysians, reflecting the aging population trend [38] 7. Sectoral Employment - Migrant workers are predominantly employed in sectors requiring low-skilled labor, such as agriculture, manufacturing, and construction [29] - The share of migrant workers in the agriculture sector increased from 21.1% in 2013 to 28.1% in 2022, while the share of citizens in this sector decreased [30]