In the World Bank 2009 Doing Business report, the Malaysia ranked 48th out of 181 economies in terms of ease in hiring employees, including the regulation of fixed-term contracts, flexibility in work schedules and procedures for redundancy and firing.

Each index assigns values between 0 and 100, with higher values representing more rigid regulations. The Rigidity of Employment Index is an average of the other three indices.

Difficulty of Hiring Index: 0    

Rigidity of Hours Index: 0

Difficulty of Firing Index: 30

Rigidity of Employment Index: 10

Firing costs (weeks of wages): 75
 
Deloitte Touche Tohmatsu says Malaysia’s workforce is young, well schooled and easy to train.

The country also enjoys a literacy rate of more than 94 percent – even higher for those younger than 24.  English, a legacy of British colonisation, is widely spoken since it remains one of several languages of instruction in schools.

Issues employers need to be aware of include skilled labour shortages (for example in the professions) and restrictions arising from the country’s bumiputera policies (affirmative action policies for Malays, Javanese and other indigenous ethnic groups).

Most foreign-invested firms do not encounter difficulties recruiting employees because they offer relatively high and attractive benefits, says Deloitte Touche Tohmatsu.

Government employment offices throughout the country provide free assistance to firms. Some companies also use registered private-sector employment agencies.

A convention that is generally observed is that all Muslim men must be allowed to attend prayers on Friday afternoons (between noon and 2.45pm) in accordance with the requirements of Islam.

Deloitte Touche Tohmatsu says wages paid by foreign firms are much higher than those paid by their local counterparts - at times up to 20 percent more.

There are two stages in the employment of expatriates:

1) Application for expatriate post. The Government has appointed the following agencies to evaluate and approve expatriate posts:

• Malaysian Industrial Development Authority (MIDA) for the manufacturing and its related services sectors.
• Multimedia Development Corporation (MDeC) for the information technology sector, specifically companies that have been awarded Multimedia Super Corridor (MSC) Status.
• Central Bank of Malaysia (BNM) for the financial, insurance and banking sectors.  Securities Commission (SC) for the securities and futures market.
• Malaysian Biotechnology Corporation (BiotechCorp – BC) for the biotechnology industry. BC facilitates immigration and employment related matters to biotechnology companies. Applications supported by BC will be forwarded to the Expatriate Committee for approval.
• Expatriate Committee (EC) for expatriate posts in sectors other than the above mentioned sectors.
• The Employment Pass Division of the Immigration Department of Malaysia is the secretariat for EC.

2) Endorsement of employment pass. After approval, companies must submit an application to the Immigration Department for endorsement of the Employment Pass. Once the Employment Pass has been endorsed, the expatriate can be hired.

For the full process and procedures, read the government guidebook (PDF, 142 KB) on employing expatriates.