Globalization of the Malaysian Manufacturing Sector: An Agenda for Social Protection Enhancement

Globalization offers opportunities for workers to achieve higher levels of economic prosperity. Unfortunately, it also causes job insecurity for specific groups in certain sectors. This is particularly so in the Malaysian manufacturing sector which is actively fragmenting its production structure. There are prior concerns that some workers in certain labour-intensive segments of the production process will be displaced. The issue is whether the country’s current social protection systems are adequate to protect the disadvantaged. The paper first addresses the effects of one perspective of fragmentation on relative labour demand in Malaysian manufacturing. Subsequently, the relevant legislations and schemes enacted and implemented to protect workers are examined. The key conclusions of the study are first, unskilled workers are more likely to lose out from the international fragmentation of imports; and second, the existing social protection systems are inadequate to meet the needs of the unskilled workers.