Malaysia’s labour market and economy have developed a segment that has long sat outside the main economic structure but is now too large to ignore. A piece published in the New Straits Times on September 16, titled “The Shadow Economy: Malaysia Can No Longer Ignore,” raises concerns over the informal, or “shadow,” segment of Malaysia’s economy.
One reason cited is local workers’ reluctance to take on certain jobs generally seen as “dirty, dangerous and degrading.” As a result, informal arrangements and reliance on foreign labour have emerged to meet demand for workers in these sectors. The expansion of this shadow economy can raise questions over worker protections, tax collection, formal employment practices and the effectiveness of economic policy. If part of the economy is not properly registered, regulated and brought under the tax system, it also becomes difficult for the state to accurately measure real economic activity.
Rather than treating the shadow economy as merely a peripheral labour-market issue, the piece argues, the structural causes behind it need to be addressed. In particular, it says, the question of working conditions, dignity, safety and benefits for local workers deserves serious attention.