The Role and Challenges of Foreign Workers in Malaysia’s Labour Force
Foreign workers remain a significant component of Malaysia’s labour force, particularly in sectors like construction, manufacturing, services, and facilities management. As of 2023, approximately 2.2 million documented foreign workers were employed in the country, alongside a substantial undocumented population. These workers primarily come from countries such as Indonesia, Bangladesh, Myanmar, and Nepal, and play critical roles in sectors that continue to face local labour shortages.
However, multiple studies and reports, including those from the World Bank, Amnesty International, and local academic institutions, have highlighted persistent issues in the workforce welfare and protection of foreign workers in Malaysia. These include challenges such as wage deductions, debt from recruitment fees, restricted access to healthcare, passport retention, and limited grievance mechanisms.
Conditions and Gaps in the Broader Landscape
According to research published in Pertanika: Journal of Social Sciences & Humanities, a significant proportion of foreign workers arrive in Malaysia indebted due to recruitment fees, with 57.6% reporting that they or their families had to borrow money to secure employment. Nearly half (46.9%) reported having their passports held by employers; an offence under Section 12(1)(f) of Malaysia’s Passport Act 1966.
Although Malaysia has introduced reforms to improve foreign worker protections, such as the Employment Injury Scheme (SOCSO), the abolition of the Workmen’s Compensation Act, and the Employer Mandatory Commitment, implementation gaps persist. Around 20.5% of workers surveyed were unaware that their employers should bear the cost of the levy, and 62.6% believed they had to pay for their own repatriation after contracts ended. Despite new grievance platforms such as the Working for Workers (WFW) app, 18.4% of respondents indicated they were unaware of any official channels to report violations.
Practices at OCS Malaysia
In this context, some companies have adopted structured systems to mitigate risks to worker welfare. OCS Malaysia outlines several key practices in managing employee welfare, particularly for foreign workers employed in frontline roles:
Health & Safety
- Regular risk-based training across work sites
- Emergency preparedness protocols, including fire drills and first aid access
- Focus on workplace ergonomics, ventilation, and lighting
Safe Lodging
- Compliance with Act 446 on worker housing standards
- Regular inspections and upkeep of lodging facilities
- Access to clean water, electricity, personal storage, and emergency support
Environmental Responsibility
- Adherence to Malaysian environmental laws
- Internal efforts to reduce operational carbon footprints, including waste segregation and energy-saving systems
Ethical Governance
- Zero tolerance for bribery, exploitation, or harassment
- Transparent payroll and recruitment practices
- Channels for raising grievances without retaliation
Management Systems
- Monitoring and auditing mechanisms aligned with RBA principles
- Training programmes covering labour rights and ethics
- Confidential complaint systems available to all employees
These practices are designed to align with Malaysian legal requirements, including the Employment Act 1955, SOCSO requirements under Act 4, and guidelines from the Department of Labour. They also reflect efforts to comply with broader global frameworks, including the ILO’s Forced Labour Convention (No. 29) and its Protocol of 2014. Collectively, these systems support workforce welfare by promoting transparency, ethical standards, and employee protections.
Conclusion
Malaysia’s reliance on foreign labour is expected to continue in the near term, even as the government encourages structural shifts toward automation and higher-skilled jobs. Within this transition, employer-level practices remain a key determinant of workforce welfare and overall worker wellbeing.
Data from recent surveys and enforcement records indicate ongoing challenges in achieving consistent protections for migrant workers, particularly in areas such as medical coverage, passport security, and cost transparency.
Institutional responses, whether legal reform, employer policy, or industry-led standards, will continue to play a role in shaping how workplace welfare supports long-term business resilience and operational continuity.