2. PLANTATION WORKERS IN SABAH: Issues and Challenges ABDUL KADIR ROSLINE IPICEX 2012

3. Prelude

4. The plantation sector is facing a shortfall of 270,000 workers There is a shortage of labor in the plantation sector and while a lot of requests have been made to the government, current global situation and expanding economies make it difficult to fulfill them. We are in fact looking at all the sources but as you know the economies around Malaysia are also expanding their plantation sector and they have equal needs for labor, in 2011, the total population of workers in the plantation sector in Malaysia was 922,328 people and locals made up 208,565 of the number while 437,731 were foreigners. We still need 270,000 workers, so there is a lot of opportunity in the sector, the oil palm industry alone needs 186,000 workers and most of the vacancies are for harvesters (152,000 needed for rubber sector). (Tan Sri Bernard Dompok, Plantation Industries and Commodities Minister, August 2012).

5. Current state of Foreign Workers The current statistical data tells us that Indonesians constitute the largest group of foreign labor in Malaysia. They occupy approximately 68-70% (1.2 -1-5 million) of all foreign workers and rising to 2 mil taking into account undocumented, illegal workers. Among the Indonesian workers in Malaysia, plantation labor consists of the largest group with 26% followed by domestic workers (24%) and construction workers (18%). There are 272,157 foreign workers in all sectors in Sabah, majority from Indonesia and the Philippine (October, 2012). Palm oil alone, 2012 revenue projection – RM60 bil/ RM18 bil for the country and Sabah respectively…massive

6. Current state of Foreign Workers..II Economic disparity between Indonesia and Malaysia is the key factor in the continuing labor migration. Common problems the labor force is facing in every sector of work are: low wages, the confiscation of passports by employers and poor working and living environment. The labor force in construction and manufacturing in many cases has to work in hazardous conditions. The turnover rate of construction workers is quite high, and those who quit often drift to plantation sites. The service industry, such as hotels and restaurants, also has many problems and in the worst case, it is connected with human trafficking. (Refer to FFM by APMMs findings)

7. Key Issues and Challenges

8. Some Challenges and Issues: Labour supply shortage given the increasing Malaysian total planted areas over the last 15 years. Competition from the expanding Indonesian plantations creating jobs for their people thus rendering recruitment of Indonesian workers to Sabah more difficult and costly. Education for the foreign workers children. Pinching of workers among plantations firms. Minimum wages for the plantation industry Getting our locals to work in Malaysian plantations.

9. 1. Labour supply shortage given the increasing Malaysian total planted areas over the last 15 years. - ISP Malaysia pegged the current total labour requirement based on the country's 5 mil hectares oil palm plantation at about 500,000 workers, while 275,000 are needed in the 1.1 million hectares of rubber plantations. - Active (pro-active) role of learning/training institutions (universities, academies, vocational,...IIPM, IMPAC etc.)

10. 2. Competition: expanding Indonesian oil palm plantations which create jobs for their people, recruitment of Indonesian workers to Sabah more difficult and costly. - increase competitiveness - reduce dependency on foreign workers - improve welfare of current workers to retain them - working/living condition/environment - education for their children

11. 3. Education for the foreign workers children. - Serious look into this issue, becoming a real threat not only for plantation sector but for all sectors. - Some efforts are on the way, but time is essence before its too late - Plantation companies to be involved/direct participation to accelerate the establishment of facilities closer to the workers locations

12. 4. Pinching of workers among plantations firms. - becoming serious, several firms including EMPA calling for intervention from the enforcement authorities. - Jun18, Sabah State Cabinet decided to allow hiring workers from Bangladesh, Nepal, Myanmar and Vietnam. - need to continue to be competitive in all aspect...major improvements and willingness to review profit making expectation.

13. 5. Minimum wages for the plantation industry The plantation sector in Sabah and Sarawak are where most of the labour workforce is needed but sadly, their wages are much lower when compared with their peers in the Peninsula. The minimum wage for field workers or fruit harvesters in the estates in Sabah and Sarawak start from RM800 per month, while those in Peninsular Malaysia can earn about RM900 per month. While most big players can easily adhere to the Government's recent call for a minimum wage, the impact will be challenging for small- to mid-sized players, especially the newcomers in the plantation industry. The critical sub-sector most affected by the minimum wage ruling will be the 180,000 independent smallholders, which also recruit foreigners as harvesters.

14. 6. Getting locals to work in the plantations. - efforts must be taken to entice Malaysians to work in the estates. - continuous aggressive campaigns and training on skills enhancement as well as on occupational safety. - improvement to the image of estate employees by providing free uniforms, boots, head gear, etc, - attractive compensation packages, contemporary forms of incentives and bonuses may attract unemployed young Malaysians to work in the estates. - Review of plantation companies' policy for better salary, pension scheme, profit sharing, employees cooperatives, house ownership, equity ownership, employment opportunities for staff children, better facilities and recreational amenities.

15. INTERLUDE

16. In addressing the inconsistent supply of plantation labor force to Sabah/Malaysia, we should be more aggressive on R&D; determined towards a total mechanisation process to achieve a productivity target of five tonnes per worker; the Government policy on foreign workers could be relaxed; genuinely committed towards an acceptable minimum wage for the industry; and all stakeholders recognise the importance of FFB harvesters' contribution to the plantation industry. 15

17. Sekian, Terima Kasih Meeting the Future Challenges of Plantation Industry through Innovation and Talent Management 16