Malaysia is working towards reducing its reliance on migrant workers as outlined in the 12th Malaysia Plan. Automation has been proposed as a potential solution to reduce the employment of low-skilled foreign labor, but this relationship remains unexamined in the Malaysian context.
While some countries have found that low-skilled migration can slow automation, this outcome varies depending on specific circumstances. There is also a belief that hiring low-skilled migrant workers negatively impacts the economy by lowering wages and productivity among Malaysians.
Migrant workers are crucial to Malaysia's economy, filling gaps in sectors like agriculture, manufacturing, and construction. They tend to be younger than local workers and will become increasingly vital as Malaysia’s working-age population declines. This importance grows when considering non-automatable jobs in an aging society, such as those in the care sector.
Research indicates that migrant workers often occupy positions with routine tasks, making them vulnerable to automation. However, automation may impact Malaysian workers more significantly due to their larger numbers. To support all workers amid technological changes, active labor market policies (ALMPs) should accompany automation efforts. These include developing lifelong learning systems and improving social insurance frameworks.
Empirical studies typically show a positive or neutral effect of immigration on Malaysian labor market outcomes, including wages. Even with investments in automation technologies, demand for migrant workers will persist—albeit possibly altering the type of worker needed.
To prepare for a future where both migration and automation coexist, two key issues need addressing: overcoming barriers unrelated to low-skilled migrants—primarily high technology investment costs—and reforming the foreign worker management system to be more responsive to economic needs. Such reforms could create mutually beneficial scenarios for both sending and receiving nations.