Why does the palm oil industry rely so heavily on foreign labour?

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The Palm Oil Industry's Dependence on Foreign Labour

The Malaysian palm oil industry's significant reliance on foreign labour stems from a chronic shortage of local workers willing to perform the demanding fieldwork. Foreign nationals constitute approximately 70 per cent of the plantation workforce and undertake nearly all field operations, with a substantial number originating from Indonesia and Bangladesh. This dependence has been exacerbated by border closures during the Covid-19 pandemic, which led to thousands of foreign workers returning home, and a steady annual departure rate of 2 per cent to 3 per cent of foreign workers.
Limited Local Workforce Participation

A primary driver of this reliance is the insufficient availability of Malaysian citizens for plantation roles. The fieldwork in palm oil cultivation is physically intensive and often less desirable compared to other employment sectors, creating a persistent labour gap. This situation has historically led growers to seek labour from abroad to meet operational needs.
Workforce Demographics and Origins

The composition of the plantation workforce is predominantly foreign, with individuals from Indonesia and Bangladesh forming the largest segments. These workers are essential for executing the day-to-day tasks required for crop cultivation and maintenance across the vast number of Malaysian palm oil estates.
Impact of Worker Departures and Border Closures

The industry's labour challenges have been amplified by external events, most notably the Covid-19 pandemic. Border closures implemented to curb the spread of the virus resulted in a significant outflow of foreign workers as they returned to their home countries. This, combined with the regular attrition rate of foreign workers, has intensified the existing labour shortage, posing a threat to the industry's operational capacity.
Economic and Operational Considerations

The dependence on foreign labour is intrinsically linked to the economic model and operational demands of large-scale palm oil production. The industry's reliance on these workers is critical, particularly as the peak crop production season approaches. A continued lack of available labour could lead to decreased crop yields and a reduction in the output of crude palm oil and palm kernels, potentially impacting the industry's long-term viability despite potential short-term price increases for the commodity.

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Why does the palm oil industry rely so heavily on foreign labour?

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