IRGA Officially Opens Agritech Experience Centre in Shah Alam
19/03/2024
The Devastating Effects of Ganoderma and Solutions for the Oil Palm Crop
30/04/2024The Dilemma of Labour Shortages in Malaysian Plantations Today
Malaysia's plantation sector, a vital component of the nation's economy, particularly its palm oil industry which contributes 2.4% to GDP, has, in recent years, faced significant challenges: one of the most pressing being the issue of labour shortages. This has emerged as a critical concern, impacting productivity, sustainability, and the overall economic viability of the sector.
To prove a case in point, the following newspaper headlines in the past couple of years capture the situation at a glance:
The shortages experienced by the industry are primarily attributable to its heavy reliance on foreign workers. The Indonesian government’s freeze on the entry of Indonesian workers to Malaysia, implemented in 2021, caused the total shortage to rise by 24.9 per cent compared to the previous year which contributed to the decline in CPO production to 18.1 million tonnes. In the previous year, about 391,000 workers were employed in the oil palm plantation sector. Out of the total, 74 per cent were foreigners, mostly Indonesians. This indicated that the sector was still not attractive enough to attract the local workforce due to the 3D (Dirty, Difficult and Dangerous) stigma.
The Factors Contributing to the Labour Shortage
There are a number of key factors which contribute to the labour shortages experienced within the sector. These can be braoadly divided into two areas, these being the socioeconomic factors and the foreign labour restrictions
Socioeconomic Factors
- The disparity in wage levels and poor, living conditions and facilities provided for workers
- Skills mismatch, whereby workers are not experienced in harvesting and mill work
- Poor perception of plantation work by locals, especially their reluctance to work in deep, rural areas where plantations are located
- Preference for urban migration with the perception that it offers a modern lifestyle and better job opportunities
Foreign Labour Restrictions
- Governmnent regulations like quotas on the number of foreign workers allowed in the country or specific industries, as well as requirements for obtaining work permits and visas
- Questionable migrant agencies (swindling unsuspecting foreign workers)
- Human Rights issues, instances of abuse or exploitation of foreign workers
- Labour market dyanmics whereby foreign labour restrictions can be influenced by issues such as a governments efforts to prioritise local employmnent and create more job opportunities for locals
The Importance of Addressing these Factors for the Sector's Sustainability
These challenges which have been outlined above need to be sufficiently addressed by the labour sector to ensure that the industry is able to progress in a sustainable manner. There are a numbe of reasons why these issues need to be addressed promptly and effectively.
Productivity Concerns
Labour shortages directly affect the productivity levels within Malaysian plantations. With fewer workers available for tasks such as as harvesting, weeding and maintenance, there is a significant risk of reduced output. This decline in productivity is not only effect the profitability of individual plantations but also contributes to a decline in overall agricultural output.
Economic Impact
The plantation sector is a significant contributor to Malaysia's GDP and export earnings. Any disruptions caused by labour shortages can have far-reaching economic implications, affecting not only the plantation owners but also the workers themselves and the broader economy. Addressing the labour shortage is crucial to maintaining the sector's contribution to the country's economic growth and stability.
Social Implications
Labour shortages in Malaysian plantations can exacerbate social issues such as poverty and inequality. Many workers in the plantation sector come from marginalized communities and rely on these jobs for their livelihoods. When jobs become scarce due to labour shortages, these communities suffer, leading to increased poverty and social unrest. By addressing the labour shortage, the government and plantation owners can help mitigate these social challenges and promote greater equity within society.
Environmental Sustainability
Plantation management practices, including timely harvesting and maintenance play a crucial role in environmental sustainability. Labour shortages can result in delayed or inadequate maintenance practices, leading to increased pest infestations, soil erosion, and other environmental degradation issues. Addressing the labour shortage is essential for ensuring that Malaysian plantations can uphold sustainable agricultural practices and minimize their environmental impact.
International Reputation
Malaysia's plantation sector, particularly its palm oil industry, has faced scrutiny from international stakeholders regarding issues such as deforestation, biodiversity loss, and labour rights abuses. Addressing the labour shortage is not only necessary for maintaining the sector's productivity and economic viability but also for improving its reputation on the global stage. By demonstrating a commitment to addressing labour challenges and promoting fair labour practices, Malaysian plantations can enhance their international reputation and market competitiveness
Therefore, the issue of labour shortage in Malaysian plantations poses significant challenges to the sector's sustainability, productivity, and overall contribution to the economy. Addressing these challenges is essential for ensuring the long-term viability of the plantation sector, promoting social equity, upholding environmental sustainability, and enhancing Malaysia's international reputation as a responsible agricultural producer.
Addressing the Labour Shortages Challenge
The oil palm plantation industry, which heavily depends on labour for tasks like maintenance and harvesting of fresh fruit bunches (FFBs), encountered significant shortages during the Covid-19 pandemic over the last two years due to the departure of foreign workers from the country.
Recently, there has been increased media coverage regarding the shortage of labour in the oil palm plantations. Efforts are underway to tackle this issue, with plans and strategies being developed to enhance the competitiveness, long-term viability of Malaysia's palm oil sector as well as to optimise and refine this projected negative perception of the sector.
For this to take effect, some of the crucial ways to combat current situation are the following steps being taken by the Palm Oil Board, the bigger plantations and smallholders:
According to the Minister of Home Affairs Datuk Seri Saifuddin Nasution Ismail’s announcement of 18 Oct, 2023, the details of the projection and entry of foreign workers through the implementation of Foreign Worker Employment Relaxation Plan (PKPPA) and Workforce Recalibration Programme (RTK) 2.0 were as follows:
However, it must be noted that, despite governmental and industry efforts, this has not been as encouraging as expected due to the fact that a sizeable number of Indonesian workers (who returned home during Covid) have been absorbed into Indonesia’s expanding oil palm plantations since lifting of Covid and enjoy better remuneration in their home country.
Indonesian government regulations to safeguard and protect their Indonesian workers have made it more challenging for the local migrant-employment agencies to recruit them
b) Outsourcing to 3rd Party Contractors
Labour in oil palm plantations in Malaysia can be outsourced to third-party contractors. This practice is quite common in the agriculture sector, including the palm oil industry. Plantation owners often hire contractors to provide labour for various tasks such as planting, harvesting, weeding, and maintenance.
Outsourcing labour to third-party contractors can offer several advantages to plantation owners, such as:
- Cost Savings: Hiring labour through contractors can sometimes be more cost-effective than directly employing workers. Contractors may be able to provide labour at lower rates or offer flexible arrangements.
- Flexibility: Contract labour allows plantation owners to adjust their workforce based on seasonal demands or fluctuations in production levels.
- Specialized expertise: Contractors may specialize in providing labour for specific agricultural tasks, bringing expertise and efficiency to plantation operations.
- Reduced administrative burden: Employing contract labour can reduce administrative tasks such as payroll management, benefits administration, and compliance with labour regulations, as these responsibilities often fall on the contractor.
However, outsourcing labour to third-party contractors can also have drawbacks, such as potential issues with labour rights, worker exploitation, and difficulties in ensuring compliance with labour laws and standards. Plantation owners, therefore, need to carefully select and monitor contractors to ensure that labour practices adhere to legal requirements and ethical standards.
c) Mechanisation of Plantations
The implementation of machinery in oil palm planations has the ability to reduce the industry's reliance on foreign labour. The Malaysian Palm Oil Board (MPOB) has developed 35 advanced technologies, including the Hydra-Porter and sensor-based spraying vehicles, to enhance efficency and reduce labour needs.
Hydra Porter 4-Wheeled Vehicle
Drone spraying pesticides in plantation
The Mechanisation and Automation Research Consortium of Oil Palm (MARCOP) aims to further technology adoption, ensuring innovations meet industry requirements. MARCOP's strategies aim to enhance mechanized cutting in the short term, integrate AI and sensor tech in the medium term, and adopt robotics in the long term, ultimately doubling labour-to-land ratios.
A study conducted on “Labour Productivity in the Malaysian Palm Oil Sector” attempts to measure oil palm labour productivity based on land-labour ratio by job category, region and estate size; and based on output-labour ratio by job category and region.
From the study, it was found that the ideal land-labour ratio for oil palm plantations in Malaysia is 10:1. Currently, the ratio set by the government for oil palm estates hiring foreign workers is 8:1 (i.e. 8 ha to one worker).
But with the innovation and technological developments in the area of mechanisation, a worker using a motorised cutter for harvesting is able to increase productivity from 0.99 t per day to 2.24 t per day.This improvement is expected to increase the labour to land ratio up to 1 to 25 hectares.
On the other hand, the medium-term strategies predict that artificial intelligence and sensors technologies could double up the labour to land ratio up to one to 50 hectares.
Future machinery must prioritize sophistication, safety, and green energy, while semi-automation can attract local workers. Adaptability to diverse terrains is crucial, necessitating preparation of plantation lands. Meanwhile, the overarching long-term strategies aim to double the labour-to-land ratio through the adoption of robotic technologies.
The utilization of advanced future machine tools, which must prioritize sophistication, safety, and the use of green energy, aligns perfectly with the transition into the new era of industry, often referred to as the Fourth Industrial Revolution or IR 4.0.
Furthermore, these machines should be designed to be semi-automated to attract more local workers to oil palm plantations. It is foreseeable that harvesting tools and cutters will incorporate robotic technology in the foreseeable future.
Moreover, these future machines must be adaptable to narrow terraces and challenging terrains commonly found in the country. Conversely, preparations for oil palm plantation land should also account for the accommodation of these machines.
Conclusion
Thus, it can be seen that the management of labour in the plantation sector posese significant challenges. Indeed, in an industry such as agriculture, the labour force has conventionally formed an essential part of the industry and are crucial for ensuring that the necessary productivity levels are achieved.
The vital role that these workers play, not only in supporting plantation companies achieve the necessary level of productivity, but also supporting the the agricultural and food industry meet increasing global demands for nutritious food sources, is sufficient reason to ensure that their roles are well looked after from both a procedural and operational standpoint.
Indeed it is in the interest of all stakeholders that the labour force in the plantation sector is supported through the introduction of the most appropriate and effective regulatory frameworks and policies available with regards to the exchange of workforces at the international level.
Furthermore, the integration of technological solutions in the form of digital, automated and mechanised solutions holds great potential for supporting field workers to perform their roles with greater efficiency. Such tehcnologies can supplment labour and also substitute it where necessary.
As the industry continues to evolve over time with such technologies, the agricultural labour force can be re-skilled and trained to leverage on these technologies in ever more sophisticated ways, boosting the value of labour and transforming the role of the field worker into one which is more technically and technologically proficient
Ensuring that plantation workers are well supported conforms to present day ESG (Environmental, Social, and Governance) frameworks, and allows plantation operations to remain sustainable moving forwards. Keeping productivity levels optimised and well-balanced in terms of sustainability, paves the way for the agricultural industry to meet goals aligned with long-term food security for the global population.
References
- Addressing labour shortage in oil palm plantation sector, Business Times, Datuk Dr. Ahmad Parveez Ghulam Kadir, Accessed 2/3/2024
- Foreign worker employment in Malaysia's critical sectors & sub-sectors exceeds projected numbers: Ministries, Human Resources Online, Accessed 3//3/2024
- Labour Productivity in the Malaysian Oil Palm Plantation Sector, Oil Palm Industry Economic Journal, Accessed 4/3/2024
- Labour shortages set up Malaysia for third year of palm oil losses, Reuters, Mei Mei Chu, Accessed 4/3/2024
- Labour shortage cost palm oil sector RM20bil last year, says Fadillah,Free Malaysia Today,Mohamad Fadli, Accessed 6/3/2024
