Federation of Malaysian Manufacturers Welcomes Government’s Decision to Defer 80:20 Ratio Policy
The Federation of Malaysian Manufacturers (FMM) has welcomed the government’s decision to defer the implementation of its 80:20 ratio of local to foreign workers policy. In a statement, FMM president Soh Thian Lai expressed appreciation for the pragmatic approach taken by the investment, trade and industry ministry.
Urging Prompt Details on Multi-Tier Levy Mechanism
FMM has urged the government to promptly provide details on the implementation of the multi-tier levy mechanism for migrant workers. According to Soh, ideally, the details of the mechanism should be announced six months in advance to give industries sufficient time to adapt to the upcoming changes.
Benefits of Multi-Tier Levy Mechanism
Once implemented, the scheme will offer a structured and demand-driven approach to labour management, with tiered levies incentivising industries to reduce dependency on foreign labour while enabling companies to hire based on operational needs. This will ensure a gradual and sustainable transition toward a more balanced workforce model.
Challenges in Labour-Intensive and Low-Skill Sectors
Soh acknowledged that the policy aimed to reduce dependence on migrant workers, but said it posed significant challenges for manufacturers in labour-intensive and low-skill sectors. Local participation remained limited in these sectors despite efforts to enhance wages and benefits.
Long-Term Strategies for Industry
The deferment of the policy allows the industry to adopt long-term strategies such as increasing automation, modernising production processes, and investing in the upskilling and reskilling of local workers to meet the demands of new, higher-value roles. This decision reflects a thoughtful approach to addressing the realities faced by the industry, particularly as the manufacturing sector continues to grapple with labour shortages and a mismatch in skillsets between available local workers and the requirements of industry roles.
Conclusion
The deferment of the 80:20 ratio policy is a practical and timely decision that ensures continuity in operations and protects Malaysia’s global competitiveness while providing industries with a transition period to prepare for the structural changes required. FMM hopes that the government will continue to engage with the industry to address the challenges faced by manufacturers and ensure a sustainable and balanced workforce model.
FAQs
Q: What is the multi-tier levy mechanism for migrant workers?
A: The multi-tier levy mechanism is a structured and demand-driven approach to labour management, with tiered levies incentivising industries to reduce dependency on foreign labour while enabling companies to hire based on operational needs.
Q: Why did FMM urge the government to provide details on the implementation of the multi-tier levy mechanism?
A: FMM urged the government to provide details on the implementation of the multi-tier levy mechanism to give industries sufficient time to adapt to the upcoming changes, particularly since the implementation will have cost implications and require adjustments to budgets and business operations.
Q: What are the benefits of the multi-tier levy mechanism?
A: The multi-tier levy mechanism will offer a gradual and sustainable transition toward a more balanced workforce model, ensuring a structured and demand-driven approach to labour management.