Research Report: Financial Impact on the Unavailability of Foreign Workers in Malaysia 2024

Malaysia’s economic growth has long been underpinned by a steady influx of foreign labor, especially in labor-intensive sectors such as construction, manufacturing, agriculture, and services. However, in recent years, particularly in the wake of the COVID-19 pandemic, the country has experienced a severe shortage of foreign workers—estimated at over 1.2 million—due to stricter immigration policies, border restrictions, and government efforts to reduce dependency on migrant labor. This shortage has significantly disrupted business operations, increased labor costs, delayed projects, and reduced productivity, especially for small- and medium-sized enterprises (SMEs). Despite efforts to attract local workers and encourage automation, these measures have not sufficiently mitigated the crisis. This study aims to quantify the financial losses incurred across various industries due to the labor shortfall, examine the operational challenges faced by affected sectors, and explore the adaptive strategies businesses are employing. It also provides policy recommendations to support labor sustainability while maintaining Malaysia’s global competitiveness. The findings underscore the urgent need for a balanced approach that addresses immediate labor demands while advancing long-term workforce development goals.