The Effects of Foreign Labor on Labor Productivity in Construction Industries
Keywords:
Foreign labor, local labor, capital, labor productivity, construction industries
Abstract
The focus of this study is the demand for foreign labor in the construction industry. While labor productivity contributes significantly to the economic growth of the country but the trend has decreased over recent years. Hence, this paper aims to identify whether the increase in the labor force or other factor inputs contributes significantly to the labor capacity of construction projects in Malaysia. Results show the relationship between labor and other factors related to employment productivity in the construction industry of Malaysia from the year of 1986 to 2020. Factor inputs consist of variables such as capital, local labor, and foreign labor. The research objective is to identify the effects of labor force and other factor inputs on labor productivity. This study employs the Cobb-Douglas production function. The findings show that there is a significant relationship whereby the financial assets have a significant relationship, whilst the local and foreign workforce has a negative relationship in terms of their impact on labor productivity. These findings provide some scientific evidence for improving the project performance of the construction industry in Malaysia. It will be useful in identifying which factor inputs have a huge impact on construction labor productivity.
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References
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Giang, D. T. & Pheng, L. S. (2011). Role of Construction in Economic Development: Review of Key Concepts in the Past 40 Years. Habitat International, 35, 118-125.
Hamid, Singh, B. S. B. J., & Mazlan, M. S. (2013). The Construction Labor Shortage in Johor Bahru, Malaysia. International Journal of Research in Engineering and Technology, 2(10), 508-512.
Hamza, M., Shahid, S., Bin Hainin, M. R., & Nashwan, M. S. (2022). Construction Labor Productivity: Review of Factors Identified. International Journal of Construction Management, 22(3), 413-425.
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Hwang, B.-G. & Soh, C. K. (2013). Trade-Level Productivity Measurement: Critical Challenges and Solutions. Journal of Construction Engineering and Management, 139, 04013013
Ibrahim, A. R. B., Roy, M. H., Ahmed, Z., & Imtiaz, G. (2010). An Investigation of the Status of the Malaysian Construction Industry. Benchmarking: An International Journal, 17(2), 294-308.
Ikuma, L. H., Nahmens, I., & James, J. (2011). Use of Safety and Lean Integrated Kaizen to Improve Performance in Modular Homebuilding. Journal of Construction Engineering and Management, 137(7), 551-560.
Ismail, R. (2015). Impact of Foreign Workers on Labor Productivity: Analysis of Firm-Level Data. International Journal of Productivity and Quality Management, 16(1), 36-53.
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Kamal, E. M., Haron, S. H., Ulang, N. M., & Baharum, F. (2012). The Critical Review on the Malaysian Construction Industry. Journal of Economics and Sustainable Development, 3(13).
Kaming, P. F., Holt, G. D., Kometa, S. T. & Olomolaiye, P. O. (1998). Severity Diagnosis of Productivity Problems a Reliability Analysis. International Journal of Project Management, 16, 107-113.
Kaming, P. F., Olomolaiye, P. O., Holt, G. D. & Harris, F. C. (1997). Factors Influencing Construction Time and Cost Overruns on High-Rise Projects in Indonesia. Construction Management & Economics, 15, 83-94.
Kazaz, A. & Acikara, T. (2015). Comparison of Labor Productivity Perspectives of Project Managers and Craft Workers in Turkish Construction Industry. Procedia Computer Science, 64, 491-496.
Kazaz, A., Manisali, E. & Ulubeyli, S. (2008). Effect of Basic Motivational Factors on Construction Workforce Productivity in Turkey. Journal of Civil Engineering and Management, 14, 95-106.
Khan, R.A. (2008). Role of Construction Sector in Economic Growth: Empirical Evidence from Pakistan Economy. Proceedings of the First International Conference on Construction in Developing Countries (Iccidc), Karachi. 279-290.
Khan, R. A., Liew, M. S., & Ghazali, Z. B. (2014). Malaysian Construction Sector and Malaysia Vision 2020: Developed Nation Status. Procedia-Social and Behavioral Sciences, 109, 507-513.
Lim, E. C. & Alum, J. (1995). Construction Productivity: Issues Encountered by Contractors in Singapore. International Journal of Project Management, 13, 51- 58.
Lindsay, C. (2004). Labor productivity. Labor Market Trends, 112, 447-456.
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Loosemore, M. (2014). Improving Construction Productivity: a Subcontractor's Perspective. Engineering, Construction and Architectural Management, 21(3):245–60
Mahmood, S., Awang, Z., Abdel Rahman Kmeil, F., and Jakada, A. H. (2021). Participation of Local Youth Workers in Construction Industry and Strategies for Improvement: A Study in Kelantan and Terengganu. Int. J. Acad. Res. Business Soc. Sci. 11 (2), 394–401. doi:10.6007/ijarbss/v11-i2/ 8225
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Mohd Fateh, M. A., Mohamed, M. R., & Omar, S. A. (2022). The Involvement of Local Skilled Labor in Malaysia’s Construction Industry. Front. Built Environ, 8, 861018.
Najib, I. Z. M., Nordin, R. M., Ahnuar, E. M., & Sukor, K. M. (2019). Malaysian is the Component of the Labor Force for the Construction Industry in Malaysia. In MATEC Web of Conferences (Vol. 266, p. 01007). EDP Sciences.
Naoum, S. G. (2016). Factors Influencing Labor Productivity on Construction Sites: A State-of-the-Art Literature Review and a Survey. International Journal of Productivity and Performance Management, 65, 401 -421.
Nikiforakis, N., Oechssler, J., & Shah, A. (2019). Managerial Bonuses and Subordinate Mistreatment. European Economic Review, 119, 509-525.
Noor, M. Z., Isa, N., Said, R., & Abd. Jalil, S. (2011). The Impact of Foreign Workers on Labor Productivity in Malaysian Manufacturing Sector. International Journal of Economics and Management, 5(1), 169-178.
Olanrewaju, A. L., & Abdul-Aziz, A. R. (2015). An overview of the construction industry. Building Maintenance Processes and Practices, 9-32.
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Published
2023-06-11
How to Cite
Mohd Nor, S., Subramaniam, G., & Sahudin, Z. (2023). The Effects of Foreign Labor on Labor Productivity in Construction Industries. Information Management and Business Review, 15(2(I)SI), 116-127. https://doi.org/10.22610/imbr.v15i2(I)SI.3426
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Research Paper
Copyright (c) 2023 Saffiah Mohd Nor, Zahariah Sahudin, Geetha Subramaniam
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