Abstract
The main objective of this paper is to analyze the relationship between immigration and labor market performance in Sabah region's oil palm plantation industry. The labour market performance refers to the wages and employment of local workers in the oil palm plantation sector. The relationship of these variables can be in short run or/ and in the long run. This study uses Vector Error Correction Model (VECM) to examine the relationship between the immigration and labour market performance. In fulfilling this study, Johansen cointegration test is used to determine the relationship among the variables - immigration, employment and wages. The data are collected from the Department of Statistics Malaysia, Labour Department, Farmers Organization Authority Malaysia, National Archives of Malaysia and Sabah Agricultural Department over the past 31 years. The result shows that there is a relationship between immigration and employment of local workers in short run and long run. While, there is no relationship between immigration and wages either in short or long run.
Highlights
Based on previous studies obtained for other countries, the impact of this immigration should reduce the amount of wages received by local workers (Card, 2001)
The equation explains that the relationship between immigration and employment is negative, where the increase in one percent of immigration will reduce the employment of local workers by 0.12 percent
This study examines the relationship between immigration and labour market performance which is measured by wage and employment at the oil palm plantation sector in Sabah
Summary
The formation of a multiracial country is a result of migration of people from other countries to Malaysia during the British colonial period. Syarisa (2002) states that there were three general phases of migration flows from Indonesia. In first phase, starting from 1969 until 1979, the second phase from 1979 until 1989, and in the third phase started since 1980s (Syarisa Yanti Abubakar, 2002). Agriculture needed more labor, especially in oil palm plantations. To fill the gap in labor supply plantation companies began to recruit foreign workers. These workers were arriving to the country illegally, because on that time there were no legal provisions for the importation of unskilled or semi-skilled workers (Syarisa Yanti Abubakar, 2002). To overcome the surplus of foreign workers problem there was variety of further actions taken by the government
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