Labor Shortages and Industrial Growth in Penang, Malaysia

• Published in: Geografisk tidsskrift 1997-01, Vol.97 (1), p.111-119
• Main Authors: Fold, Niels, Wangel, Arne
• Format: Article
• Language: English
• Subjects: Asia; Bgi / Prodig; electronics industry; labor market regulation; labor shortages; Malaysia; Malaysia. Singapore; Penang; Southeast Asia; Third World industrialization
• ISSN: 0016-7223; 1903-2471
• DOI: 10.1080/00167223.1997.10649397

Geografisk Tidsskrift, Danish Journal of Geography 97: 111-119, 1997. During the last two decades, industrial growth in Penang has been rapid. In particular, production and employment in the labor-intensive segments of the electronics industry have increased tremendously due to investments by transnational companies from the USA and Japan. In the first decade, the demand for adequately skilled and disciplined labor from Malaysia's rural areas was covered without major bottlenecks. However, recent reorganization of production in the electronics industry and the general expansion of manufacturing production in the area imply a more complex and uncovered demand for skilled and flexible labor in combination with unskilled and low paid labor. On the basis of scattered statistical data and a series of interviews with representatives for private capital, labor, and state authorities in the Penang industrial complex, this paper illuminates the nature of the labor shortages and the forms of response by individual capital. The objective is to assess the ability of existing labor market institutions to deal with the labor demand and to promote localized learning capacity. We find that a number of informal labor institutions have developed while the federal and local state have failed to establish adequate regulatory mechanisms. We conclude that the official preoccupation with the maintenance of low wages hampers the creation of new, productivity enhancing labor market institutions.