Title: Impact of foreign workers on labour productivity: analysis of firm level data

Authors: Rahmah Ismail

Addresses: School of Economics, Faculty of Economics and Management Universiti Kebangsaan Malaysia, 43600 Bangi, Selangor, Malaysia

Abstract: The majority of foreign workers in Malaysia are unskilled and more than half come from Indonesia. Nowadays, labour productivity is the main concern of firms in a bid to reduce the cost of production and be more competitive. Therefore, the issue is whether foreign workers have an adverse effect on labour productivity in Malaysia. The present paper attempts to investigate this issue using data from 279 companies in 2011 collected by means of a field survey. The companies are located in Kuala Lumpur, Selangor, Pahang, Terengganu and Johor in Malaysia. The labour productivity model is estimated using local and foreign workers, skilled labour, semiskilled labour and unskilled; labour as independent variables. The results show that skilled foreign workers do not contribute significantly to labour productivity. Instead, the unskilled and semiskilled foreign workers have a significant and negative impact on labour productivity.

Keywords: labour productivity; skilled workers; semiskilled workers; unskilled workers; local workers; foreign workers; Malaysia; Indonesia.

DOI: 10.1504/IJPQM.2015.070191

International Journal of Productivity and Quality Management, 2015 Vol.16 No.1, pp.36 - 53

Available online: 21 May 2015 *

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