Labour Productivity

Among Harvesters
and FFB Collectors
by Country of
Origins:

A case study in Peninsular

Malaysia
MPOB Strategic Direction: Enhance Productivity
Project Leader
1. HONEY IRMAWATI HAMZAH
Co-Researcher
2. AZMAN ISMAIL
3. SITI MASHANI AHMAD
4. NORHIDAYU ABDULLAH
5. ALI ZULHUSNI ALI NORDIN

OUTLINE OF PRESENTATION
Problem Statement
Objective
Expected Benefits
Introduction
Literature Review
Methodology
Activities & Timeframe
Competitive Analysis
Expected Expenditure
References

#1

PROBLEM STATEMENT
Severe labour shortage problem in Malaysian oil palm industry.
Lack of interest of local workers.
(Source: Azman, I & Choo, Y M (2013)).

Thus, estates engaged foreign workers especially from Indonesia for field
activities. Indonesia represented the biggest number of workers in Malaysia
because of their higher labour productivity and similarity of language.
These field workers also come from other countries and mostly work in
Peninsular Malaysia as labour laws in the Peninsula are more open than
in Sabah and Sarawak.
Due to the presence of workers from many origins in Peninsular
Malaysia, it is believed that there could be a difference in their
productivity levels.
Since productivity is an important element to measure economic growth
of the industry, there is a need to know their productivity levels based on
their country of origins.

#2

OBJECTIVE
Indonesia

Myanmar
To estimate labour productivity
for oil palm harvesting and FBB
collection activities in Peninsular
Malaysia among workers from
different countries

India

Bangladesh

Thailand
Cambodia
Pakistan

Vietnam

#3

EXPECTED BENEFITS

assist
decision making
process of oil palm
estate in hiring
their workers
especially for
harvesting and
FFB collection
activities

increase
estates
productivity and
revenue

convince
Estate owner to
hire workers with
higher productivity
based on country
of origins

#4

INTRODUCTION
Labour

Productivity

( OUTPUT : INPUT )

Economist use labour productivity (LP) as a measure for economic

growth of a country.
LP is a revealing parameter of several economic indicators as it offers
a dynamic measure of economic growth, competitiveness & living
standards within an economy.
LP helps to explain the principal economic foundations that are
necessary for both economic growth and social development.
Inputs of LP : hours worked, workforce jobs and number of people in
employment.

#4

INTRODUCTION (CONT)

The Importance of Labour Productivity

Investopedia, 2015
The growing labour productivity depends on three main factors:
investment and saving in physical capital, new technology and
human capital.
Xiaming, L. et. al., 2001
Labour productivity depends on the degree of foreign presence and
other variables, namely capital intensity, human capital and firm
size for scale factors.
Abdul, R. et. al., 1997
Rising labour productivity seems to be the only way to solve the
problems of a tight labour market, which is normally found in a
progressive economy

#4

INTRODUCTION (CONT)
Economy in Malaysia is mainly driven by labour productivity.

Source: MPIC, 2014

#4

INTRODUCTION (CONT)
Number of Workers by Job Categories
(As at December 2014, Total number of workers in Malaysia = 451,507 )
General
Mandore

Harvesting
Mandore

Harvester &
FFB Collector
174,472 (38.7%)

Field Worker

Other Field
Workers

Total number of workers in Peninsular Malaysia = 180,850

13%

35%

10%

3% 3%

46%

90%

#4

INTRODUCTION (CONT)
Harvesters & FFB Collectors by Country Origins in Peninsular
Malaysia (75,334 workers)

174600.00%
3%

125600.00%
2%

14500.00%
0%

644600.00%
9%

5809000.00%
86%

Indonesia
Bangladesh
Nepal
India
Thailand
Myanmar
Others

#5

LITERATURE REVIEW

MAHBOB, 2010
The oil palm industry has a big problem on labour shortage and the
industry incur losses as bunches and loose fruits were not collected
completely.
In addition, foreign workers have to leave the country as their work
permit expires and they would bring with them the training they had
been given.
New intakes will automatically show a drop their productivity.

#5

LITERATURE REVIEW (CONT)

MAMAT, 2010
Foreign workers help in a way to increase Malaysian export
earnings.
This is because if their number in the country were reduced by 30%,
Malaysian palm oil export earnings could shrink as much as RM10
billion a year.
Consequently, the policy and strategy on foreign labour in the palm
oil industry should be reviewed and managed in a more integrated
manner among the Ministries Agencies and Industry
Associations.

#5

LITERATURE REVIEW (CONT)

ALTO, 2010
The high foreign content in the workforce of the plantation
industry is a phenomenon which had existed for a long time.
The country failed to attract local employment seekers to be in the
oil palm workforce even with concerted efforts by the industry and the
government.
The local workers view manual work in the industry negatively mainly
due to the location of oil palm plantations are always rural in nature,
workers must wake up every early and rising level of education has
allowed many to find other jobs.
It is a challenge for both the government and the industry to
change their mindset, attitude and perception.

#6

METHODOLOGY
DATA COLLECTION
Primary data
Face-to-face interview
Field visit to estates in Peninsular Malaysia
Secondary data
e-labour database
DATA TO BE COLLECTED :
E-LABOUR
Total FFB production
Total foreign worker for harvesting &
FFB collection activities
No. of harvesting round per month
Total area covered for harvesting &
FFB collection activities

SURVEY
No. of working days per month
No. of working hours per day
Total Income per month

#6

METHODOLOGY (CONT)
PILOT TEST
Testing for reliability of the questionnaire

DATA ANALYSIS
Labour Productivity =
Where :
Units produced
Labour-hours used

Units produced
Labour-hours used
:Total of FFB production (tonne)
:Total of number of working hours per day

SOFTWARE & ANALYSIS

SPSS version 20.0

#7

ACTIVITIES & TIMEFRAME

PHASE 1

Literature Review

PHASE 2

Design Questionnaire & Pilot Test

PHASE 3

Actual Data Collection

PHASE 4

Data Analysis & Report Writing

PHASE 5

Report Finalization and VIVA

2015

ACTIVITIES

Q2

2016
Q3

Q4

PHASE 1
PHASE 2
PHASE 3
PHASE 4
PHASE 5

Apr 2015 Mac 2016

Q1

#8

COMPETITIVE ANALYSIS
WEAKNESS
STRENGTHS
The LP is conceptually simple and can be
The LP understates productivity growth
calculated from available data (e-labour)
because improvements in the quality of
output are not taken into account.
It is calculated on per worker hour basis. It
automatically takes into account changes in
The use of output per worker hour subtly
the length of the work week.
implies that labour alone is responsible for
rising productivity, which is not true. The
Finally, as a measure of hourly output, LP
factors affecting labour productivity are
can be directly compared with hourly wage
manifold and diverse.
rates.
OPPORTUNITIES

THREATS

Productivity growth is the basic source of Accident or disaster can happen, so that it is
improvements in real wages and living of
extremely
difficult
to
estimate
standards
output/productivity per monthly or yearly
basis
Productivity growth is an anti-inflationary force
in that it offsets or absorbs increases in
nominal wages

#9

EXPECTED EXPENDITURE

Item
Asset
Service
supply
TOTAL

Year 1
(RM)
&

Year 2
(RM)

Total
(RM)

13,360

2,370

15,730

13,360

2,370

15,730

#10

REFERENCES
1. ABDUL, R., et. al. (1997). Measuring Labour Productivity through
Labour Requirement Approach: The Malaysian Experience.
Pertanika Journal of Social Sciences & Humanities, 5 (2). pp. 139144.
2. ATTO, E. (2010). Allocating Local Workforce to Work in the Oil
Palm Industry. Palm Industry Labour: Issues, Performance and
Sustainability (PILIPS) Workshop, 8 9 February 2010, Le Meridian
Hotel, Kota Kinabalu, Sabah. pp. 105 110
3. AZMAN, I & CHOO, Y M (2013). The Importance Of Labour In The
Supply And Demand Of Palm Oil In Malaysia. Palm Oil Internet
Seminar (POINTERS). 22 29 July 2013. [Available at
http://www.pointers.org.my/v2/report_details.php?id=135]

#10

REFERENCES
4. OECD (2002). Measuring Productivity; Measurement of
Aggregate and Industry-Level Productivity Growth. Available at
http://www.oecd.org/std/productivity-stats/2352458.pdf
[Accessed
March 10, 2015]
5. INVESTOPEDIA
(2015).
Labor
Productivity.
http://www.investopedia.com/terms/l/labor-productivity.asp
[Accessed March 17, 2015]
6. MAHBOB, A. (2010): Status of the Labour force in the Upstream
and Midstream of the Palm Oil Industry. Palm Industry Labour:
Issues, Performance and Sustainability (PILIPS) Workshop, 8 9
February 2010, Le Meridian Hotel, Kota Kinabalu, Sabah. pp. 141 152

#10

REFERENCES (CONT)
7. MAMAT, S. (2010): Foreign Labour - Issues and Challenges.
Palm Industry Labour: Issues, Performance and Sustainability
(PILIPS) Workshop, 8 9 February 2010, Le Meridian Hotel, Kota
Kinabalu, Sabah. pp. 111 130
8. MPC
(2014).
http://speedminor.mpc.gov.my/csp/sys/bi/
%25cspapp.bi.index.cls [Accessed March 17, 2015]
9. SMITH, A (1776). An Inquiry into the Nature and Causes of the
Wealth of Nation. Volume 1. London: W. Strahan. Available at
http://www.ifaarchive.com/pdf/smith__an_inquiry_into_the_nature_and_causes_of_the_wealth_of_nation
s[1].pdf. [Accessed March 17, 2015]
10.XIAMING, L, et. al. (2001): The impact of foreign direct
investment on labour productivity in the Chinese electronics
industry. International Business Review (Vol 10, Issues 4). pp. 421
439

Thank You