This article first appeared in The Edge Financial Daily, on January 20, 2016.

KUALA LUMPUR: Malaysia can cut back on the number of foreign workers by one million individuals if Putrajaya increases the number of women in the labour force by 60%, acccording to the Malaysian Employers Federation (MEF).

The call by the MEF comes as Putrajaya said it will go ahead with a controversial plan to bring in 1.5 million Bangladeshi workers starting this year.

MEF executive director Datuk Shamsuddin Bardan said with the right tax breaks and incentives, the number of women workers could be increased from the current 53%, which is among the lowest in the region.

He said in Japan and South Korea, women drop off from the labour market mainly to have children, but they return to work, unlike in Malaysia where women do not.

The first step to getting them to come back, he said, is for Putrajaya to allow companies to claim tax deductions for paying employees’ child care subsidy.

“In the past, companies would be able to claim a tax deduction when they gave their employees RM250 for childcare purposes. This was not part of the wage, but a kind of subsidy,” Shamsuddin told The Malaysian Insider.

The RM250 would go towards paying fees at child care centres and this would persuade women to back to work, he said.

“Currently, these fees are quite high. If a woman has three children and each kid costs RM400 to send to a centre, the total is RM1,200 a month.

“So why would a woman come back to work for only RM2,000 a month?”

The RM250 tax deduction, Shamsuddin said, was popular among companies, but most abandoned it.

The 11th Malaysia Plan also aims to raise women’s participation in the workforce to 59% by 2020.

Malaysian Trades Union Congress said it proposes childcare assistance to Putrajaya every year when it releases its budget wish list.

“We agree that women’s participation in the workforce can be increased if we help with childcare services,” said MTUC secretary-general N Gopal Kishnam.

This could be done either through allowances or helping companies set up childcare centres at workplaces, he said.

“But every year, it seems that our calls fall on deaf ears,” said Gopal.

But running childcare centres at workplaces is expensive, said Shamsuddin.

“We had about 100 companies doing this in the 1990s. But they gave up because it was costly. Now there are only about 30 companies which do it, but these are mostly government-linked firms.”

Childcare centres, he said, need to be in neighbourhoods where workers live and Putrajaya must do more to increase their number and make them more affordable.

Allowances for employees to pay for childcare services, Shamsuddin said, are more effective.

“This is an untapped labour force of one million and we can reduce the number of foreign workers we bring in,” he said.

Currently, the MEF estimates that there are more than five million foreign workers in the country, half of whom are illegal and undocumented.

With the current minimum wage rate, about RM30 billion flow out of Malaysia through official channels as these foreign workers send money home.

“If you count remittances that do not go through conventional money transfer methods, then the total could be more than RM50 billion.” — The Malaysian Insider