LABOUR COST SURVEY IN MALAYSIA:

A COMPARATIVE STUDY ON EMPLOYING

LOCAL AND FOREIGN EMPLOYEE IN

PRIVATE SECTOR

INTAN BUKIT KIARA12th September 2017

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CONTENTS

Objective

Definition of Labour Cost

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Recommendations

Respondents Profile

Methodology

Findings & Key Takeaway

Objective

The Labour Cost Survey is aimed at compilingindicators and measures of the level, compositionand evolution of labour cost to the employer.

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Wage costWage cost

Definition

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Wage cost Non-wage cost

Payroll-related costs:

1. Basic wages in cash

2. Cash allowances (e.g. shift, meal, housing,

transportation, cost of living, travel,

entertainment, telephone, etc.)

3. Commission

4. Overtime payment

5. Contributions to EPF and SOCSO by the

employer

6. Contributions to other pension funds by the

employer

7. Bonus

1. HRDF (Human Resources Development Fund)

2. Facilities and benefits (i.e. accommodation

and utilities, transportation, meals, medical,

training, sports, recreation, child care, uniform,

protective clothing, security equipment, loan

subsidy, retirement benefits)

3. SPPA (Skim Pampasan Pekerja Asing)

4. Severance / termination payment

5. Recruitment cost (e.g. job advertisements,

fees to recruitment agencies, career fair,

relocation, health screening)

* Levy for foreign workers (part of the cost in

the employment of foreign workers but

currently not paid by the employers)

Labour CostCost incurred by the employer in the employment of labour.

Total labour cost includes wage and non-wage costs

Source: ILO

Methodology

• establishments in the private sector

• formal sector wage earners and salaried employees

• Online Survey

• September – December 2016

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Respondents

Note: Excluded sector MSIC Section 0 : Public Admin and Defense...;MSIC Section T : Activities of Household as employers.....; andMSIC Section U : Activities of Extraterritorial organizations and bodies.

Data Collection

Methodology

• Department of Statistic Malaysia (DOSM)

• Stratified Sampling – by state, industry & employment size

• Monthly Data - June 2016

• Annual Data - 2015

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Data Reference

Sampling

Employers’ Profile: Location

Northern region: Perlis, Kedah, Penang, Perak

Central region: Selangor, KL, Putrajaya

Southern region: Negeri Sembilan, Melaka, Johor

East coast region: Kelantan, Terengganu, Pahang

East Malaysia: Sabah, Sarawak, Labuan

20%

7%

34%

15%

24%

n=685

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x% Distribution of survey respondents

Distribution of survey respondents

Employers’ Profile: Industry

6%

3%

13%

2%

2%

7%

8%

7%

3%

7%

4%

4%

9%

4%

6%

6%

4%

6%

A. Agriculture, forestry and fishing

C. Manufacturing

G. Wholesale and retail trade; repair

of motor vehicles and motorcycles

F. Construction

I. Accommodation and food

service activities

K. Financial and

insurance/takaful activities

S. Other service activities

D. Electricity, gas, steam and

air conditioning supply

H. Transportation and storage

J. Information and

communication

N. Administrative and

support service activities

R. Arts, entertainment and recreation

E. Water supply; sewerage, waste

management and remediation activities

P. Education

L. Real estate activities

M. Professional, scientific and

technical activities

Q. Human health and social

work activities

B. Mining and quarrying

8x%

Employees’ Profiles

7%

Malaysian Non-Malaysian (Expatriates and PR) Non-Malaysian (Foreign workers)

685 59,653Total

employersTotal full-time employees (Malaysian

and non-Malaysian)

92%

4,358

54,660

635 1%

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n=685

Managers

Professionals

Technicians and associate

professionals

Clerical support workers

Service and sales workers

Skilled agricultural, forestry, livestock

and fishery workers

Craft and related trades workers

Plant and machine operators and

assemblers

Elementary occupations

8%

12%

8%

32%

6%

0%

2%

12%

20%

21%

54%

7%

2%

0%

0%

2%

8%

6%

1%

4%

2%

0%

2%

8%

4%

34%

45%

635

Expatriates and PR

4,358

Foreign workers

54,660

Malaysians

Employees’ distribution by job category

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Findings & Key Takeaway

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Output of the Study

Average Labour Costs Per Employee

Average Labour Costs By Nationality Of Worker

Average Labour Costs By Occupations

Average Labour Costs By Economic Sector Or Sub-sector

Average Labour Costs By State Or EconomicCorridor

Average Labour Costs Per Hour Worked

Average Labour Costs By Gender

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Full-time

Wage Cost

Non-wage Cost A

Non-wage cost B(recruitment only)*

TOTAL(Wage cost + non-

wage costA)

RM 6,304 RM 22,296 RM 1,962

RM 530 RM 5,231 RM 309

RM 6,834 RM 27,527 RM 2,271

RM800 –

RM1,000

RM15,000 –

RM20,000RM10,000 –

RM15,000

Average Total Labour Cost: Malaysian Vs Non-Malaysian

Employees: National Level

Average per employee per month

Average per employee**

13secondary information and industry feedback

* Severance payment is excluded as it is not applicable to most employers (<3% of survey respondents paid for severance in 2015)

** Due to survey data limitation, the average recruitment cost per employee is based on top-level estimation using survey data,

Full-time

Malaysian

Full-time Full-time

Expatriate/PR Foreign Workers (PLKS)

Total Labour Cost According to Job Categories (Skilled)

Malaysian vs Non-Malaysian

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Total Labour Cost According to Job Categories (Low Skilled)

Malaysian vs Non-Malaysian

*Does not include the levy cost which is currently not borne by the employers. 15

AVERAGE OT PAYMENT Malaysian – RM390.00

Foreign Workers – RM500.00

Average working hours per week per employee

National averageForeign workers worked about 5-7 hours more per week compared to Malaysians and expatriates / PR (including OT hours)

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Total Labour Cost: Malaysian Employees by Job Categories

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Total Labour Cost: Malaysian Employees by Industry

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Recommendations

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Labour Cost Survey to be conducted on annual basis: To enable amore robust assessment of employment and wage policies;

Labour Cost Survey could be integrated with similar national surveys

such as the National Employment Returns (NER) and National Wage

Index to ensure a more efficient data collection process and to

reduce survey fatigue among respondents;

Strict liability: Employers’ responsibility in recruitment and welfare offoreign workers.

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Foreign workers management blue print: To have a comprehensiveforeign workers policy including Expatriate; and

THANK YOU

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