No 3rd parties in recruitment


The government’s decision to halt the outsourcing of foreign worker recruitment to third-party agencies and centralise it within would make the process easier and quicker and eliminate profit-making middleman.

Malaysian Employers Federation (MEF) ED Datuk Shamsuddin Bardan (picture) said third-party agencies are charging high fees and are unable to meet the demand for workers.

“MEF is of the view that third parties should not be allowed to be involved in recruitment, whether it is through outsourcing companies or the Private Employment Agencies Act 1981,” he told The Malaysian Reserve (TMR).

According to Shamsuddin, the majority of employers went through third-party companies, partly due to the difficulty in securing approvals to hire foreign workers.

“Initially, outsourcing companies were supposed to fill the short-term requirements, but they will not supply workers for three to four months. They will only supply workers if the foreign workers are contracted to work for two to three years,” he said.

For small and medium enterprises (SMEs), the removal of foreign worker recruitment firms would enable better control over the hiring process, SME Association of Malaysia president Datuk Michael Kang said.

“The industry has totally agreed to remove third parties in the foreign worker application and recruitment process. If this is a government duty, why go through agents?” he told TMR.

According to Kang, the system should be implemented online, thus making it easier for SMEs to hire foreign workers.

To recap, the joint committee between the Home Ministry and the Human Resources Ministry on the management of foreign workers said last week it would stop outsourcing foreign labour recruitment to agencies as soon as next year.

It said foreign worker hiring, which was previously under the Home Ministry, will now be handled by the Human Resources Ministry’s private employment agency.

Home Minister Tan Sri Muhyiddin Yassin, who chaired the committee’s first meeting last week, said the decision was made for the benefit of foreign workers in Malaysia, as there have been complaints about the third-party outsourcing firms and unfair treatment of workers, as well as cases of human trafficking.

Shamsuddin, however, added that managing foreign labour hiring under the Private Employment Agencies Act 1981 would not resolve the problem either, as the Act still uses third parties to recruit workers.

“We are worried that recruitment under the Act will be very bureaucratic and cumbersome,” he said.

Muhyiddin said there are at least 100 companies handling over 26,000 foreign workers involved in the outsourcing committee.

The joint committee will hold talks with the companies later, giving the firms time to decide on the relocation of employees to selected employers.

Shamsuddin noted at the height of foreign worker hiring via third parties, there were around 270 recruitment agencies in operation.

He said these agencies made a margin of about 30% to 40% on the monthly hiring fees, if the worker is outsourced to the company and the foreign worker’s permit is owned by the outsourcing company.

When the foreign worker’s permit is owned by the employer and the worker is managed by the outsourcing company, the firm’s margin ranges between 20% and 25% of the fee.

According to Muhyiddin, as at end-September this year, there were a total of 1.89 million foreign workers in Malaysia with temporary passes issued by the Immigration Department.

The main sources of these foreign workers are Indonesia, Bangladesh, Nepal, India and Myanmar.