Zuraida, here’s an easy answer to oil palm labour woes

 

Plantation Industries and Commodities Minister Zuraida Kamaruddin has given some interesting figures in a reply to a question in Parliament. If the figures are right, I offer below a complete solution to the palm oil industry’s labour woes.

This plan I propose will be one that will not only benefit all plantation owners but workers as well who will be so well-rewarded that there will be no need for the industry to import workers anymore. That is if Zuraida’s figures are correct.

According to her figures, Malaysia’s oil palm sector lost an estimated RM10.46 billion worth of unpicked fruit in the first five months of this year because of the ongoing labour shortage.

She added that there was a shortage of 28,940 labourers in the industry, with an estimated productivity of harvesting two tonnes of oil palm fruit a day, which comes up to about 57,880 tonnes of fresh oil palm fruit being unharvested a day, or 1.5 million tonnes a month.

“Based on this calculation, it is estimated that unpicked oil palm fruit due to a lack of labourers in the first five months of 2022 is around 7.52 million tonnes. This comes up to a value of RM10.46 billion, taking into account the average price of oil palm fruit from January to May, which was at RM1,390 per metric tonne,” she said in the parliamentary written reply.

Her plan to resolve this is to encourage plantations to increase the use of machines to reduce dependence on labour, which would also boost productivity and increase workers’ income.

“And it is hoped that this would, in turn, attract more young Malaysians to join this sector,” she said.

However, the harvesting process is notoriously resistant to automation and those in the industry have maintained that harvesting needs to be labour intensive. That need not be a problem though.

No-brainer solution

Let’s look at Zuraida’s figures again. There’s a shortage of about 29,000 workers which led to the loss of some 7.52 million tonnes of unpicked fruit worth some RM10.5 billion over the first five months of this year.

To be sure, that’s a lot of money, but what if the plantation industry paid decent wages and provided better working conditions for them in an attempt to attract Malaysians into the industry and eliminate that wastage. Perhaps RM3,000 to RM5,000 a month per worker with accommodation provided and meals taken care of.

I can hear the protests already. Plantation owners and employers everywhere represented by the Malaysian Employers Federation are bitterly protesting the introduction of a minimum wage of a mere RM1,500 a month. I must be crazy for suggesting RM3,000 a month, right? Wrong.

The scenario is some 29,000 workers are paid RM3,000 per month and let’s say it costs another RM1,000 to maintain them in relative comfort in decent accommodation and provide decent meals or allowances in lieu to make a grand total of RM4,000 per month.

That amounts to RM116 million (29,000 x 4,000) a month or RM580 million (116 x 5) for five months. What do the employers get in return? RM10.5 billion.

In other words, spend just some RM600 million and you get a net incremental profit of RM9.9 billion. A return on investment of 16.5 times (9,900/600) or 1,650 percent for five months! That has got to be one of the highest returns anywhere for money spent. Annualised, it amounts to over nearly 40 times (16.5 x 12/5) or 4,000 percent.

I can see the retort - Malaysians won’t work for RM4,000 per month in salary and benefits. Really? So many youths are unemployed with degrees, so many people are struggling to meet living costs. Well, alright, let’s increase the salary and benefits - make it RM10,000 a month.

That makes the total cost per month RM290 million (29,000 x 10,000) or RM1.45 billion (290 x 5), in return for which you get RM10.5 billion for a net gain of RM9.05 billion and a return on investment 6.25 times (9.05/1.45) or 625 percent - that is still damn bloody good! Annualised, that’s 1,500 percent.

The point is that the salary can be increased by huge amounts and still provide great earnings for plantations.

Addicted to cheap labour

Zuraida in her reply said the industry was heavily dependent on foreign labour, with 75 percent of manpower on farms comprising migrant workers. But that need not be so. If wages and living conditions are increased, there is no reason why Malaysians can’t be enticed to work there, over time reducing the dependence on foreign workers.

After all, a lot of plantation land, especially in Peninsular Malaysia is located near urban centres. And with proper off days, Malaysians who like urban areas would still be able to enjoy that while working in plantations.

The underlying problem is that Malaysia has become too used to cheap foreign labour which works under atrocious, even slave-like conditions, often with no or little respect for the rights of these workers. The government is complicit in these matters, turning a blind eye to unbridled exploitation.

Thus, employers often want to squeeze as much as possible from labour and when they can clearly afford to pay better wages, they don’t, instead constantly asking for the government to facilitate imports of cheap labour.

We need to relook our labour policies and to reduce reliance on foreign labour over time so that local labour, read Malaysians of all races but mainly Malays because they form the majority of the population, can benefit from the wealth creation that is still taking place rapidly in this country of ours.

When we use/exploit foreign labour to produce this wealth, the benefits don’t flow to Malaysians but simply enrich the few owners. Wealth becomes concentrated instead of being spread around.

Zuraida’s figures show that plantation owners, blinkered by their own short-sightedness, can't even see an opportunity to improve their earnings just because they have to pay workers more.

So Zuraida, take the lead, take this proposal to the plantation owners. But this backdoor government won’t. It is not only incompetent but corrupt to boot and utterly focused on winning the next elections by hook or crook. - Mkini

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P GUNASEGARAM, a former editor at online and print news publications, and head of equity research, is an independent writer and analyst.

The views expressed here are those of the author/contributor and do not necessarily represent the views of MMKtT.