Malaysia eyes reforms to reduce reliance on foreign employees in 2024

The country plans to develop a support system, addressing MSMEs concerns before implementing progressive wage policies.
By: | December 12, 2023
Topics: Compensation and Benefits | Compliance | Malaysia | News | Restructuring

Malaysia’s government is planning significant reforms to its labour market in 2024, aiming to reduce the country’s reliance on foreign employees.

The move comes after the government recently tabled a new white paper on its progressive wage policy. Rafizi Ramli, Minister of Economic Affairs of Malaysia, stated that the ministry has already made most of the crucial structural decisions this year, with the focus shifting towards implementation in 2024.

“The biggest focus in 2024 will be on the reform of the labour sector. The reform (is imperative) to develop a timeline and strategically place all systems to enable the government to reduce dependency on foreign employees,” he said.

While acknowledging the challenges involved, Rafizi emphasised the importance of developing a comprehensive support system for employers to facilitate the implementation of the reforms. He stressed that the ministry is committed to minimising implementation risks and challenges through fair studies and assessments.

“I am not sure if this can take place with just one instruction. What is needed is to develop a support system so that through it, we can start it,” he explained. “I hope that the entire ecosystem will participate in the reform process if we want to continue moving forward.”

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The government also acknowledged concerns from micro, small, and medium enterprises (MSMEs) regarding the potential impact of the progressive wage policy on their operations. Rafizi assured that the ministry would address these concerns before implementing the policy to prevent potential job losses and business closures.

“We know that more than 80% of employers are in the MSMEs categories and if we force the increase of wages for employees, we might be looking at layoffs and the possibility of these small organisations shutting down. Hence once the policy is implemented, the ministry will solve all these issues first,” he said, reported New Straits Times.