80:20 local-foreign workforce ruling

Per the announcement in 2016, all companies in the manufacturing sector were to be required to have an 80-20 ratio of workforce between locals and foreign workers respectively.

Employers in Malaysia's manufacturing sector will not be required to abide by the 80:20 local-foreign workforce rule until 31 December 2024, according to the Ministry of International Trade & Industry (MITI).

On Facebook, the Ministry shared an infographic stating: "Compliance with full-time workforce conditions in the manufacturing sector, issued by MITI, which requires (employers to have their workforce comprising) at least 80% of Malaysians (80:20) has been postponed until 31 December 2024.

"This follows industries that are facing issues of acquiring local workforce that are affecting business continuity and competitiveness. MITI will continue to support the industry in efforts to enhance job creation and placement for local citizens and take initiatives to improve the level of automation processes."

For context, per the announcement first made in 2016, the Government would have required all companies in the manufacturing sector required to have an 80-20 ratio of workforce between locals and foreign workers respectively, upon implementation of the rule.

This latest extension announcement, Dr Syed Hussain Syed Husman, President of Malaysia Employers' Federation (MEF) said , is a welcome ruling as there are "shortages of foreign workers faced by practically all sectors". As such, it is "really very difficult for employers to attract locals to fill up existing vacancies despite the fact that about 3.9% (of the workforce), involving 699,000 of locals, is still unemployed."

"Even if some locals are recruited, they are not likely to stay, and would leave within a few weeks' time," the President added.

In the meantime, until 31 December 2024, President Syed hopes that the Government can first resolve manpower "misunderstandings" with nations like Indonesia and Bangladesh, whereby "the two are important source countries for foreign workers to Malaysia".

"It is critical for the Government to iron out any outstanding matters so as to ensure that the smooth supply of foreign workers will not be disrupted. Employers have endured shortages of foreign workers for a long time and (these) have caused operational disruptions to businesses," he said. Further, some businesses in the manufacturing sector "had to turn down new orders for fear of not being able to meet the deadlines".

"Construction companies had to bear penalties for late deliveries. Restaurants being bombarded with complaints from customers for slow services and hotels were also being criticised for not being able to check in the guests on time due to rooms being not ready. Plantation companies suffered huge losses due to shortage of harvesters," President Syed explained.

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Image / MITI Facebook

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