Thursday, 25 October 2012

Causes and effects of labour shortage in palm oil field


The article is about the shortage of the labour and the problem that lead from the shortage of the labour. Most of the labour that work in palm oil plantation field in Malaysia are from Indonesia but now according to The Star, the palm oil in Indonesia are booming and it lead to the shortage of labour in Malaysia palm oil field as they will get higher paid if they work in their own country. The technology of the machine now is not high enough for example the cantas, fresh fruit bunches harvesters and many other different machine. Cantas is a machine that are able to help to harvest the palm oil fruits but cantas today only can reach five meter so it is unable to harvest on the palm oil fruits or fruits that are grow on above five meter so it still need labour to help on harvesting as there many palm oil tree that are taller than five meter. Palm oil tree that are below five meter is consider as the young palm oil tree and for those palm oil tree that are over 15 years all are above five meter high and the cantas today are unable to help to harvest the palm oil.
The main reason that causes shortage of the Indonesia labour is because of the booming of palm oil in Indonesia. The substitution for the Indonesia labour can be the labour from other country such as Bangladesh, Myanmar and other country that do not have many palm oil field. Local people and the machine that can help in palm oil sector can be the substitution of the Indonesia worker too. Based on what I observed, the demand for the Indonesia labour is more elastic as there are many substitutions for it. Besides that, the supply of Indonesia labour in this situation is shortage.

The supply of the palm oil will decrease as the producers do not have enough workers to work for them due to the shortage of the labour. The market of the palm oil will not reach the market equilibrium as the supply are not able to reach the demand of the market and I think it may make the price of the palm oil increase as there is a shortage.
Government should interfere in the labour shortage problem by making agreement with other country to ensure that their citizen get a good and fair treatment in our country even they work as labour in our country. This will give the easement to the producers that need to employ foreign workers. There are many cases that the Indonesia labour do not get fair treatment in our country as they are given a lot of work but only get very low paid same goes to the cases of the Indonesia maid being torture in our country. Besides that, the foreign labour are being paid less than what actually they worth as they actually worth more. It is not fair for the Indonesia labour as they work very hard in our country. Besides that, government should ensure that our country will be in safe condition if many of the foreign labour comes to our country as there are quite a lot of criminal cases happened due to the foreign labours.

Furthermore, Malaysia government has set a minimum wages at RM 900 for the salary of all the foreign workers to ensure that the foreign labour able to get the paid they should get which mean there is a price floor for the salary for the foreign labour so more labours are willing to work in Malaysia. The rate of minimum wages increases then the unemployment will increase too as the basic salary for the foreign labour is higher and the employers are not willing to employ more labours as they need to pay more for the labours if they employ more labours. In this situation, the market failure will occur too as the supply of  labours in Malaysia will decrease due to the shortage of labours as the employers are not willing to employ more labours this will affect the supply of the palm oil to decrease as there are not enough of labour working in the palm oil sector. This will cause the shortage of the labours in the market and this will make the market of the labours could not reach the market equilibrium as the quantity demand will exceed the quantity of supply.


Price that under the price floor is the black market which means it is illegal. Black market occurs in this situation also as the foreign labour do not employed by the employers so they do not have work because of the minimum wages that set by government. The foreign labour will become illegal labour to work in our country so that the employers do not need to follow the minimum wages rule by employing the illegal labours. Besides that, large amount of money need to be paid by the employer for the procedure on employing the foreign labour and to employ the foreign labour so there are many illegal foreign labour in the market today as the employer can save more money if they employ the illegal foreign labour. Besides that, some of the legal foreign labours do not get high paid in their current work so they willing to change their work and become illegal workers to get higher paid in other places and this occurs the black market. If there is the illegal worker in the market then the black market will occurs.
Lastly, government should also invest more on increasing technology so that those company are able to come out more machine that got no or lowest limitation that able to fully replace the foreign workers or labour workforce. Government can find more expert or professor from oversea to invest new machine that are very high technology and able to replace and solve the problem of shortage of labours. For example come out with new cantas that able to harvest every fruit on higher tree like 15 to 20 meter height tree.

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