The Small and Medium Enterprises Association of Malaysia (SAMENTA) has voiced support for the proposed postponement of the 80:20 quota for the hiring of foreign workers in the manufacturing sector.
If implemented, the quota would mandate SMEs in the manufacturing sector to hire 80 percent of local workers before being permitted to hire foreign workers.
“Our SMEs are not ready for this ‘system shock’ at a time when we are already facing the triple whammy of rising costs of raw materials, huge jump in minimum wages and a debilitating labour crunch,” said SAMENTA Central chairman Datuk William Ng in a statement.
It has been widely reported that the industry is short of between 1 million and 1.5 million foreign workers, primarily to work in the sectors shunned by the locals such as the 3D (dirty, dangerous and difficult) jobs.
For instance, many SMEs are facing difficulties to recruit employees in these sectors despite offering wages above the RM1,500 minimum rate, said Ng adding that the current scenario is adversely affecting small factories.
“As such, it is wrong to assume that SMEs prefer foreign workers to local workers – especially since the costs of hiring foreign workers are far higher and complicated,” he said
Unlike larger factories that are better automated, SMEs generally require more feet on the shop floors. In fact, this is one of the reasons why multinationals outsource their labour-intensive tasks to SMEs.
SAMENTA is looking at helping its members and SMEs, in general, to automate and digitalise quickly “but this goes beyond technology and requires a mindset and process change that will take time”, according to Ng.
As we move into the endemic phase, he noted that there has been a strong resurgence of demand and orders, but the current shortage of labour is severely hampering the SMEs’ ability to recover to the pre-pandemic level or to take advantage of the surge in demand.
As a result, many of these orders are now taken up by neighbours such as Vietnam and Indonesia.
Ng said: “If the 80:20 quota is implemented as scheduled, we expect further closure of businesses, which are already under tremendous pressure due to rising costs of raw materials, huge jump in minimum wages and a debilitating labour crunch.
“Give us time to recover to pre-pandemic level and automate and digitalise our operations before implementing such massive policy changes – which is akin to a death knell for our labour-intensive SMEs.”
Formed in 1986, SAMENTA is Malaysia’s oldest association for small and medium enterprises. Its mission is to champion the development of SMEs through a four-prong approach of policy consultation, market access, business amplification and capacity building.
