Businesses Had to Turn Down Orders Due to Labour Shortage

Malaysian firms, from palm oil plantations to semiconductor manufacturers, are declining orders and foregoing billions in sales due to a labour shortage of more than a million workers, which is jeopardising the country's recovery.

 

Unable to fulfil orders

Due to sluggish government approvals and prolonged talks with Indonesia and Bangladesh regarding worker safeguards, industry groups, companies, and diplomats, Malaysia has not witnessed a major return of migrant workers despite imposing a Covid-19 block on recruiting foreign workers in February.

As an export-dependent country and a vital link in the worldwide supply chain, it is relying on millions of foreign workers to fill manufacturing, plantation, and service sector jobs that locals regard as dirty, dangerous, and difficult.

Manufacturers, who account for about a quarter of the GDP, are concerned that as growth accelerates, they may lose consumers to other countries.

"Despite the greater optimism in outlook and increase in sales, some companies are gravely hampered in their ability to fulfil orders," stated Tan Sri Soh Thian Lai, president of the Federation of Malaysian Manufacturers, which represents over 3,500 businesses.

According to Datuk Carl Bek-Nielsen, chief executive director of oil palm producer United Plantations Bhd, palm oil growers are at a breaking point.

"The situation is dire and very much like having to play a game of football against 11 men but only being allowed to field seven," he commented.

 

In dire need of workers

According to industry and government data, Malaysia is short 1.2 million workers across manufacturing, plantation, and construction, with the shortage worsening every day as demand climbs and the pandemic eases.

Manufacturers say they are in need of 600,000 workers, construction requires 550,000, the palm oil industry states a shortage of 120,000 workers, and chipmakers are in need of 15,000 workers and unable to meet demand despite a global chip shortage. Meanwhile, medical glovemakers reported that they require 12,000 workers.

According to statistics from S&P Global, Malaysia's manufacturing Purchasing Managers' Index fell to 50.1 in May from 51.6 in April, narrowly remaining in expansion, as the industry cut the most jobs since August 2020.

Datuk Seri Wong Siew Hai, head of the Malaysia Semiconductor Business Association said that chipmakers are turning away clients, locals are not keen on working in the industry, and many who do join quit in less than six months.

The palm oil industry, which accounts for 5% of Malaysia's GDP, has warned that 3 million tonnes of crop could be lost this year due to unpicked fruit, resulting in losses of more than RM17.66 billion. If the labour scarcity continues, the rubber glove business expects to lose RM3.095 billion in revenue this year.

 

Source: The Edge Markets