Who is Keeping Score? Estimating the Number of Foreign Workers in Malaysia

Malaysia has seen a rise in foreign labor inflows due to steady economic expansion and demographic changes.

• The country’s foreign workforce hovers around 15% of the total labor force, concentrated mainly in lower-skilled occupations.
• Foreign labor has made important contributions to the labor market and economic growth by addressing labor market imbalances and filling shortages in low-skilled and labor-intensive sectors.

With foreign labor as a key contributor to growth, a better understanding of their numbers can facilitate a more rigorous analysis of their impact on the economy and formulation of evidence-based policies to manage foreign workers and harness the benefits of foreign labor.

• A more systematic use of existing administrative data can improve the quality of foreign labor estimates. These approaches include:
• The “residual” method, comparing the total non-citizen population with estimates of the lawfully residing non-citizen population, which are based on visa issuance data such as work permits, student passes, expatriates and their dependents, and social passes.
• The “build-up” method, counting the various groups of irregular foreign workers based on data related to deportees, amnesty, refugees, visa issuance, and medical examinations required for work permits.
• The “remittance data” approach uses outward-remittance transaction data to identify remitters who are potentially irregular foreign workers, mapping remitter information with the foreign worker management system.

Following from this approach, the report estimates that:

• The total number of foreign workers in Malaysia ranged from 2.96 million to 3.26 million in 2017.
• Among these, the number of irregular foreign workers is estimated to be 1.23 million – 1.46 million.

Going forward, Malaysia should improve interagency coordination and collaboration to narrow gaps in estimating irregular foreign workers. This collaboration would be a building block to create an integrated management information system to better utilize existing administrative data.