Demand for Migrant Agricultural Workers to Heat Up - Part #2

Australia & Taiwan demand for Indonesia workers, implications for Malaysia palm oil

We case study Australia that is looking for many more agricultural workers, reportedly now focusing on Indonesia as well as Oceania, and Taiwan that has opened up for agricultural labour workers from Southeast Asia in 2020 (see table below, agricultural sector workforce sizes with migrant worker numbers policies to be clarified). Indonesia has been restrictive of migrant workers for agriculture, but we should expect a review and change of this policy, especially balanced against its urban-industrial workforce needs and plantation worker needs in more remote areas.

These countries will be offering significantly higher wages (see table below, indicative monthly earnings comparisons) with their higher value-add farm/agricultural sectors and better conditions than the likes of Malaysia.

Moreover, Malaysia’s recruitment permit system dominated by agencies and concessionaires and this will be an ongoing red flag for labour specialists. And worse, Malaysia’s overall high cost system approach may be an economic disadvantage if and when other countries rollout straightforward pro-labour G2G MOUs with the likes of Indonesia.

Our view: While oil palm plantations have enjoyed relatively high margins and been profitable year-in year-out (for most but the most marginal producers or those who ran into balance sheet and other internal problems), it is an extensive crop and its labour needs are big at about one person per eight hectares, across several million hectares. Wages are set by the Malaysia palm sector-designed piece rate/productivity system where workers are often incentivized to harvest and deliver one tonne of palm fruits per day with limited mechanisation.

The less-than-formal seasonal agricultural in several key exporters are becoming more formalized and may offer more international demand competition for Southeast Asian workers, just as workers are attracted into domestic industrial and service sectors and are unwilling to take on poorly remunerated dirty, difficult & dangerous (DDD) work. In this regard, it is worth noting:

1. the willingness of Malaysians to take on well paid DDD jobs overseas;

2. the 50% higher pay in the palm sector of Latin America; and

3. Taiwan’s 32% higher pay for local versus migrant workers in its livestock sector (note: the details of benefits in kind also need to be reviewed). 

Indonesia labour excels in agriculture and in semi-skilled roles and we expect it is being approached by big agri-food exporters to discuss labour sourcing in order to regularise labour and for them to expand production amidst booming demand and prices. Malaysia palm oil employs and needs about 500,000–700,000 workers and on skill-matching about ⅔ are from Indonesia, thus 300,000–460,000 Indonesians, in reality and theory. If the likes of Australia and Taiwan lobby for Indonesian agricultural workers and Malaysia is not concerted in reforming to be an attractive employer, palm oil will need to significantly change its strategic plan for workers—perhaps sooner rather than later.

Note: (1) 1 United States Dollar equals  4.46 Malaysian Ringgit (MYR); (2) ILO Global Estimates on International Migrant Workers: The ILO estimates that 169 million people are international migrant workers. International migrant workers constitute 4.9 per cent of the global labour force. Source: PalmTrack - Khor Reports, 4 Aug 2022, Khor Yu Leng (yuleng@segi-enam.com)

Links: [1] No problem for RM1,500 minimum wage in plantation sector; [2] Indeed.com: Farm Worker salary in Malaysia; [3] Jobted: Farm Worker Salary in Australia

Australia and Taiwan seeking more Indonesia agricultural workers? Here are a couple of news links:

• Nov 2021, Australia: Over 22,000 more workers are still needed to fill labour shortages across the agriculture industry. “Statistics from the latest Australian Bureau of Statistics (ABS) Labour Force Survey (LFS) indicate that the Australian agriculture, fisheries and forestry sector employed 325,000 people on average over 4 quarters to August 2021, with the horticulture and broadacre (livestock and cropping) industries accounting for the vast majority of workers. However, the ABS LFS only accounts for the Australian resident civilian population and is therefore an underestimate of total agricultural employment due to the significant number (>35,000) of overseas workers employed on farms.”

• Taiwan has been formalising its migrant agricultural workers system in recent years. Mar 2022, Taiwan: “The Council of Agriculture (COA) said on Monday (March 14) that it had approved the entry applications of about 2,400 migrant agricultural workers…

  “The Ministry of Labor (MOL) on Feb. 15 reopened the country’s borders to migrant workers from the Philippines, Vietnam, Thailand, and Indonesia, Tsai noted. However, she said Indonesia does not allow its people to work as agricultural laborers overseas, and therefore there will be no Indonesians among this group of 2,400 migrant agricultural workers.”

For Part 1, click the following link: Demand for Migrant Agricultural Workers to Heat Up - Part #1.

Demand for Migrant Agricultural Workers to Heat Up - Part #1

Migrants workers have been a dominant feature of the economies of Malaysia, Singapore, and Thailand, with especially strong reliance on massive flows of workers in sectors like construction and agriculture; and their role permeates other sectors too. Asia has seen big flows of workers and we expect some changes as the post-Covid recovery drives policy shifts. We focus on Malaysia’s palm oil sector as a major destination for migrant workers and a scenario for competition from Taiwan and Australia agriculture with a strongly pro-labour compliant Indonesia considering requests for migrant workers.

Malaysia palm oil issues, challenging Indonesia rules, others will reform

Indonesian migrant workers have been greatly depended on by Malaysia plantations and they are they are also the core of the country’s construction sector skilled labour force. Indonesia has been moving to protect the interest of its migrant workers, especially domestic workers where abuse cases have caused much concern. An expert notes especially the struggle to get judgment against errant employers, even in some extreme cases. Labour specialists tell us that this is due to very strict interpretations by Malaysian judges and this is seen as a rather awkward technical legal problem.

There has been less concern from Indonesia about agricultural and other economic sector workers; we think for rather practical and obvious reasons—they work together in larger groups, in formal and informal settings. With the shortage of labour in Malaysia, employers are bidding and paying up and according to work hours and overtime, and Malaysia implementation of regulations on working conditions are improving, and employers have been talking about the higher costs. 

However, the recent 2022 US Trafficking in Persons or TIP report still ranks Malaysia low. It is looking for stronger statistical evidence of implementation including investigations and prosecutions. The treatment of migrant workers by local law enforcement has been notorious and widely discussed in Malaysia but with so-far limited political will for change.

And there is a huge number of undocumented workers. After years covering this topic, we realise that a big “tell” is the discussion about daily wages rather than monthly wages or earnings for migrant workers. Other issues are worker safety, excessive overtime, living conditions and another forced labour issue, the cost of recruitment. These are official and customary costs; some companies deem the latter as illegal or corruption and this reduces the amount that they are willing to pay for restitution or reparation on recruitment cost. This seems to drive the sub RM5,000/migrant worker offered by some palm oil companies versus average toward RM15,000 offered by some rubber glove companies. But it is widely thought that migrant worker do NOT face significant total cost differences based on which economic sector they end up in. 

Workers are still moving internationally in the millions, hoping for higher wage and a big pot of savings, and many achieve this and this demonstration effect drives others to do so. But for those who fail in their quest the outcome is sad and it can even be tragic. A few years ago, I was told by a plantation labour specialist that suicides happen before a worker’s term is up and due to go home, and he realises he has not saved enough. These figures are said to be unreported and in the last 15 years, I’ve not observed this being discussed at an industry level. 

Importantly, there has been a drive for legislation and regulation to protect migrant workers, including in labour supply countries like Indonesia and Bangladesh. And more will do so, especially in light of increased international competition for migrant workers. At the implementation stage, it is a great time for supply countries to leverage demands on behalf of their workers.  

On the demand side, we see the regional competition for agricultural workers rising and expanding. We expect the Covid recovery to drive change toward a more formal and compliant agricultural labour supply.

While Western markets have been worried about labour standards in supply markets such as Malaysia palm oil; their own farm sectors have been notoriously reliant on informal seasonal labour with substandard conditions, e.g. third world-like agricultural worker slums in Spain reported in The Guardian and other news media. This should be gradually cleaned up at labour destinations and we look to Taiwan and Australia as agricultural product export case studies, but we think continental EU and US might still lag as much of their produce is consumed domestically. 

The restart of mass cross-border people movement has been used by key labour origins to bargain for better labour standards implementation, notably for Indonesia. The political-economic landscape is changed with the agro-commodity price boom—albeit with major price swings—and those who have had a relatively easy time sourcing massive amounts of migrant workers should wake up to better compliance and new competition.

Read Part 2 about the outlook for demand for Southeast Asian migrant workers from Australia and Taiwan.

#DaruratBanjir: Our Expectations for You were Low but Holy...

The end of 2021 was marked by disaster for too many in Southeast Asia. Weather conditions were notably severe in parts of the region, especially for the Philippines due to Typhoon Odette, violently disrupting the lives of more than four million people.

While weather-related destruction was not as severe as in the Philippines, the December 2021 floods in Malaysia displaced tens of thousands. Despite it being one of the worst floods the country has seen, the official response was widely seen as being astoundingly slow, and it was followed by finger-pointing and defensive statements by government agencies.

For the second time in a year, frustrated citizens and migrants took it upon themselves to help one another.

On Twitter, #DaruratBanjir (Flood Emergency) took off, with the hashtag used to highlight SOS alerts, coordinate rescue efforts, and amplify donation drives. A peak of 800,000 hashtag uses is an extremely large figure for Malaysia social media, and should be a wake up call for the government (at federal and state level) and politicians.

Old hashtags such as #KitaJagaKita (we take care of each other) and #RakyatJagaRakyat (the People take care of the People) resurfaced as well, though not to the extent of a boom of #DaruratBanjir messages. Similarly, #KerajaanGagal (failed government) and #KerajaanBangsat made a comeback, with #KerajaanPembunuh (Murderous Government) spiking around the time the first reported death due to the floods was made.

The phrases "DO NOT DONATE TO GOVERNMENT” and “DO NOT DONATE HERE” (typically typed in all caps) have gained significant traction as well. These campaigns were netizens’ response to the Keluarga Malaysia Flood Relief Flood launched on 21 December 2021—many disagreed with the government’s decision to raise funds for flood victims by collecting donations from the public and urged others to donate to reputable NGOs instead. Exasperated Malaysians would later tweet the same advice to Apple CEO Tim Cook when he announced that the tech giant will be contributing to relief efforts to Malaysia and Philippines.

Note: The charts above depict the number of mentions of popular hashtags and phrases used in relation to the December 2021 floods; the bottom chart is the same as the one above, but without #DaruratBanjir (which was used extensively to pinpoint SOS alerts, donation drives, and emergency appeals) for easier analysis. #KitaJagaKita, #RakyatJagaRakyat, and the #KerajaanGagal/Bangsat/Pembunuh hashtags were already used earlier in the year, particularly during the #BenderaHitam (black flag), #BenderaPutih (white flag), and #Lawan (fight) movements, which were triggered after a year of questionable pandemic management by officials.

All in all, public reaction paints a clear indication of a trust deficit in the government. With the disastrous way officials responded during and after the floods, including recent attempts to censor/censure tweets critical of the government, people are wondering how Putrajaya will regain the rakyat’s trust .

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In other related observations, the World Bank has not had time to measure the impact from the floods in the country. It has urged Malaysia to continue with its existing income reliefs for another six months, especially for its poor and most vulnerable communities, following the the launch of its Malaysia Economic Monitor December 2021 Edition Report on 21 Dec 2021.

On the issue of problematic policy, politics and the floods: it is unfortunately nothing new. Khor Reports has written about it in The Political-Economy of Land Development (or the Politics of Floods) back in 2018. Climatic changes from a regular to wetter-than-usual weather (La Nina phenomenon, was well known months ago) increases flood risks, and combined with major land development-clearance activities, and dysfunctional federal-state planning (with invariably go-getting state land development projects), flood crises will surely become politicised, especially of this scale and tragedy.

On PalmTrack, we also have a post on the impact of the floods on palm oil supply for both Indonesia and Malaysia. Subscribe to read the full post.

The People Ain't Happy: The #Lawan Protests

Public sentiment on Twitterjaya has not improved since our last post—developments on the political front, while interspersed with heart-warming achievements by all our athletes throughout the ongoing Tokyo Olympics, continue to chip away at the Rakyat’s patience.

Most recently, the drama is centred around special Parliamentary sitting, which culminated in the King reprimanding de facto law minister Takiyuddin Hassan for misleading Parliament after the latter made a startling claim that royal assent has been given to revoke the Emergency Ordinances introduced during Malaysia’s state of emergency. Interestingly, proceedings were then postponed indefinitely after Covid-19 cases were reportedly detected in the Parliament buildings.

After more than a year of questionable pandemic management by officials, public frustration has finally spilled on to the streets. 31 Jul saw #Lawan (fight) protestors gathering in Kuala Lumpur to voice their dissatisfaction against the Mahiaddin government. The use of #Lawan hashtag recorded an impressive total of more than 210,000 mentions on Twitter on the day of the protest alone. Other notable hashtags including #KeluardanLawan (get out and fight) and #LawanIntimidasi (fighting intimidation) also received significant attention, receiving about 19,000 and 11,000 mentions respectively. #Lawan received another spike when Opposition MPs staged a protest on 2 Aug in response to the postponement of parliament proceedings, recording about 41,000 mentions that day.

In contrast, the long popular #KerajaanGagal (failed government) similarly showed an uptick in mentions, albeit less dramatic compared to the aforementioned, more event-specific hashtags.

Note: #Lawan again recording a staggering number of mentions, further solidifying our opinion of the campaign potentially being one of Malaysia’s most successful online campaigns thus far.

#BukaDataran (Open up the Dataran) was used during the #Lawan protest when demonstrators were barred by police from entering the Dataran Merdeka. #HartalDoktorKontrak (contract doctors’ strike) refers to the nationwide strike on 26 Jul by contract doctors over unfair employment conditions; the hashtag recorded up to 146,000 mentions on Twitter on the day of the strike.

The pandemic has clearly made online campaigns increasingly popular as an outlet for public disapproval. Unfortunately, official response against these campaigns seem to generally consist of either threatening compounds against protestors, calling up individuals for police questioning, or arresting activists involved in these protests. Whatever it is the government is intending, these actions are unlikely to gain much candy points from the already irate public.

Song of Angry Men: Social Media Campaign Ramps Up as Malaysians Protest Against Government

In recent weeks, several events have heated up social media in Malaysia: the announcement of the indefinite Phase One of the Movement Control Control, rising cases of suicide due to pandemic-related hardships, insensitive reactions to the #BenderaPutih (white flag) movement by politicians, including trying to hijack or out-right dismissing the campaign, just to name a couple. On the international front, Malaysia is making headlines again for the wrong reason—National Geographic described the country as “one of the worst affected in the region,” while the Economist ranks Malaysia last in its return-to-normalcy index.

Malaysians apparently have had enough.

On 3rd July, the #BenderaHitam (black flag) campaign started on social media. The hashtag, along with its simpler but widely popular sibling hashtag #lawan (fight), recording a cumulative total of more than 200,000 mentions (and counting) mostly on Twitter (and including some count in blogs, and online media etc.), in the past week alone. The movement essentially makes three demands: (1) for the immediate resignation of Prime Minister Mahiaddin Yasin (alias Muhyiddin Yassin); (2) for immediate reopening of Parliament; and (3) for the end to the state of Emergency.

The campaign has escalated after months of the #KerajaanGagal (failed government) hashtag and its iterations, including #KerajaanCirit, which trended after a two-sentenced press statement from the Prime Minister’s Office announcing that the embattled leader has been hospitalised due to diarrhoea.

Note: #lawan records a staggering number of mentions, leaving us wondering whether this online campaign is Malaysia’s most successful thus far. We think #lawan's popularity could be breaking some all time records in Twitterjaya.

The visceral anger from Malaysians seems triggered by the dubious conduct of the political elite, including, among others, illicit durian gatherings, official derision of the #BenderaPutih campaign, police investigation on the #BenderaHitam movement, and overseas trips. These put Malaysian citizens at odds with the country’s authorities.

On the business front, rumours and news of questionable land deals happening such as the Subang Airport deal and mining activities at Tasik Chini are abound, driving a stark contrast with the litany of reports of Malaysians struggling to get by amid the Covid-19 lockdowns. Malaysia’s upcoming 5G project, weighing in at RM11 billion (versus recent direct fiscal support of RM5 billion and RM10 billion for the needy bottom strata of Malaysia society), has gone viral in WhatsApp speculation. The sound of billions may not be sitting well with worries about more Malaysians falling deeper into financial despair and students still struggling to get access to the internet.

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Hello there!

If you are able, do consider donating to organisations helping communities in need. Author Hanna Alkaf has compiled a useful Twitter thread on of #BenderaPutih initiatives here: thread of #BenderaPutih initiatives. Alternatively, KitaJagaKita maintains a fully verified list of the same over at their website: KitaJagaKita.com.

There is now also a map of food banks available throughout Malaysia created by Twitter user @penangstrays that can be shared to those who need the help: Food Banks: public food banks in Malaysia.