THE Malaysian Employers Federation (MEF) has expressed support for allowing refugees to work in Malaysia’s formal labour market, but said any such move must be carefully designed, clearly regulated and supported by strong verification and enforcement systems.
A structured right-to-work framework could benefit employers and workers by reducing reliance on informal labour channels and lowering the risk of exploitation.
However, weak implementation could create compliance risks for employers and distort low-skilled labour markets, MEF president Datuk Dr Syed Hussain Syed Husman said.
MEF said a regulated system could improve worker traceability, reduce dependence on illegal labour brokers and strengthen alignment with Environmental, Social and Governance (ESG) standards in recruitment and employment practices.
It added that employers could gain access to a more stable and documented workforce while reducing exposure to exploitative arrangements.
At the same time, MEF warned of risks including labour market segmentation in low-skilled sectors, increased administrative burdens if procedures are not streamlined and potential misuse of refugee status where verification systems are weak.
It also flagged possible conflicts with existing foreign worker management policies if coordination is not properly aligned.
Syed Hussain said any framework must balance humanitarian considerations with labour market stability.
“We must ensure that while we address humanitarian needs, we do not unintentionally create a parallel system that complicates labour administration or affects local workforce dynamics,” he said.
MEF said a right-to-work system must clearly define eligibility criteria, permitted sectors, employment duration and worker mobility.
It added that integration with immigration enforcement systems, along with employer liability protection mechanisms, would be essential to provide compliance certainty.
Without these safeguards, MEF warned the policy could create regulatory ambiguity, particularly in sectors already facing labour shortages.
Refugees and undocumented migrants are largely concentrated in informal, low-skilled sectors such as construction, plantations, manufacturing, subcontracting, services and domestic work.
However, it said there is no comprehensive official dataset distinguishing refugees, asylum seekers and undocumented migrants in Malaysia’s workforce, meaning most estimates are indicative and based on enforcement records and sector-level shortages.
Employers continue to face chronic shortages in these sectors, where informal hiring persists due to cost pressures, flexibility needs and administrative constraints.
MEF said the absence of a formal refugee employment framework has contributed to the growth of informal labour intermediaries and unregulated recruitment networks.
It added that this increases risks such as wage suppression, contract substitution, exploitative working conditions and weak traceability of employment relationships.
Illegal labour networks, it said, should also be seen as a symptom of regulatory gaps where labour demand exists but legal pathways remain limited or unclear.
“A critical policy insight is that informality tends to expand when legal channels are too restrictive or administratively burdensome, rather than purely due to enforcement weaknesses,” MEF said.
MEF said a well-designed framework could reduce labour informality and exploitation within Malaysia’s foreign workforce ecosystem.
However, it stressed that success depends on administrative clarity, strong verification systems, employer protection mechanisms and alignment with broader foreign labour policies.
“Without these elements, the system risks creating compliance uncertainty rather than resolving it,” Syed Hussain said.