Supply factor and segmentation processes.

The characteristics of labour supply, particular those of local workers, also contribute significantly to creating and maintaining segmentation in Brunei’s employment structure. The main ones are the education system, inadequate number of locals with tertiary education, unpolarised supply of skills, preference of locals for white collar employment, particularly in the public sector, absence of proper contracts of employment, lack of training among the locals and diflferential privileges given to different local ethnic groups (see Figure 3.1). All these features of labour supply interact with one another and consequently create and maintain segmentation of employment in Brunei. These features are explained below.

a) Education system

Until the 1970s, education policy emphasised formal rather than vocational education. Today, there are many vocational schools offering a range of courses to young Bruneians and training them in the skills required by private sectors employers. However, the increasing enrolment of

young Bruneians in vocational and technical schools^ and the number that graduates from these institutions do not translate into an increased supply of vocational and technically-oriented locals for private sector companies. This is because, according to employers interviewed (field survey, 1992/93/94), most of the graduates from vocational schools still choose to work in the

government sector, doing jobs that are different from their training background, especially those whose training was related to construction activities.

Indeed, as Bruneians have become a society which strongly aspires to an affluent and comfortable lifestyle, they have also become selective in their choice of occupation, preferring white collar public sector employment and shunning blue collar jobs particularly in the private sector. Such an attitude has exacerbated the local manpower shortage, especially for private sector jobs which do not require high qualifications and skills, such as driving motor vehicles, fuelling motor vehicles at filling stations, grass cutting and general labouring. These jobs therefore have to filled mainly by foreign workers

The types of education provided in Brunei, which affect their labour skills, their preferences with respect to types of occupation and different employers (public and private sectors) therefore constitute one of the fundamental mechanisms which create a segmented employment structure between local and foreign workers, and between Malay and non-Malay.

b) Unpolarised supply of skills

The skill supply in Brunei is such that relatively more locals are available for semi-skilled middle level occupations, particularly clerical and related jobs, while highly skilled manpower, manually skilled and unskilled labour is lacking. Thus, there are continuous domestic labour supply gaps at the upper and lower ends of the skill spectrum which have led to the recruitment of foreign workers to fill them.

’increasing from 314 in 1975 to 1691 in 1996 (EPU., Brunei Darussalam Statistical Yearbook, 1975/76 and I996/97-. 99 & 148).

At the upper end of the skill spectrum, the persistent lack of education among the locals, particularly at tertiary levels, causes limited supply of locals for highly skilled and professional jobs, such as administrative, managerial and specialists, for example doctors, accountant, quantity surveyor and engineers. The majority of the locals with these specialist qualifications are absorbed into the government sector. The manpower supply for such occupations therefore, has to come fi'om foreign labour sources. Similarly, the supply of labour for the lower skilled and unskilled jobs also has to come fi^om abroad. In this case, the problem of the locals is not they are lacking in education, but mainly due to their unwillingness to perform blue collar jobs, particularly in the private sector.

Thus, it is the continuous shortages of highly skilled locals for high level occupations and the negative attitudes of the locals towards low level jobs that have fundamentally caused shortages of domestic labour supply, and which constitute a segmentation process because foreign workers have to be employed specifically in these types of occupations. Indeed, for low level menial jobs in particular, the locals in general self-exclude themselves fi'om such types of occupation which have come to be reserved for foreign workers.

c) Preference of locals for government sector employment

The limited supply of local workers for both high and low skilled jobs in Brunei has been further exacerbated by their preference to work in the government sector. This preference is first due to the attractions of better job security and other monetary and non-monetary remuneration. Second, they have to work fewer days and shorter working hours which is also attractive to the locals. Third, generally, working in the public sector carries better prestige than in private sector companies. The inclination of the locals to work in the government itself constitutes a mechanism which keep the locals in general away fi'om private sector employment. This is strongly reinforced by the readily available overseas manpower supply of different skills to which private sector employers turn.

d) Absence of employer-local worker employment contract in the private sector

For the most part, local workers working in private sector companies do not have formal work contacts. Whenever local employees want to leave their jobs, they only need to give a one-

month notice to their employers. This means that it is quite convenient for local workers to change jobs, either from one private sector company to another or from a private sector company to the government sector. It is also easy for employers to sack local workers whenever the service of the latter is no longer required hence job security is uncertain. Therefore, according to employers (interview survey, 1992/93), when there are better paid jobs and terms and conditions of work elsewhere, for instance in the government sector, locals can conveniently apply for the new jobs. When the application is successful, the worker concerned can easily leave his/her current job after the one-month’s leave notice expires. In order to have a more stable workforce, employers prefer to employ overseas manpower because foreign workers normally work for a minimum of two-year contract. On the part of employers therefore, absence of a longer-term work contract between local employees and employers is a negative mechanism which contributes to segmentation of the private sector workforce. On the part of local employees, the absence of a long-term contract is a positive mechanism, because they do not have to be tied-down to one particular job for long. The earlier work experience and skill they gather will enable them to move up the career ladder, either by securing occupations in the government sector or in other private sector companies.

e) Lack of training of locals in the private sector

As local employees tend to hop jobs, employers are quite reluctant to provide training for them, because of the risk that they will leave the company within a short period. As a result many locals lack the skills required by employers, putting them at a disadvantage position. This means that they are unable to improve their skills to qualify them for higher level jobs in the company. Such a situation discourages them from staying longer in the company. The upper level occupations in private sector companies therefore continue to be filled by foreign experts, whom employers can readily recruit without having to train them first. This makes such types of occupation non-competitive. Thus they way in which training opportunities are provided is another mechanism of segmentation because it continues to maintain the segmented employment structure between the local and foreign workers by types of occupation in private sector companies.

f) Foreign workers

Foreign workers are available at different skill levels (from skilled to unskilled), they are relatively cheap and more reliable in terms of job tenure (as claimed by employers during interview, 1992/93). All of these combine to provide a reliable source of labour supply to employers to compensate for the local labour shortage. Generally therefore, private sector employers have developed a preference for their employment, a fundamental factor which creates and maintains segmentation between local and foreign workers in the Brunei employment structure. Hence foreign labour has become a significant and permanent component to the Brunei total workforce. However, segmentation also exists among the different nationalities of foreign labour as well as between skilled and unskilled. This will be examined in specific economic sectors later in the thesis.

Overall, this section has indicated the ways in which those factors which create the characteristics of labour supply (local and foreign) are themselves segmentation processes. The nature of labour supply (local and foreign) reinforced the ways in which other two actors, employers and institutional bodies play their roles in labour market. This is because all the features and mechanisms included in the model explained (above) interact together to form a set of processes, resulting in a segmented employment structure in Brunei.

3.3 Conclusions

In summary, the chapter has outlined a model for analysing the segmentation processes in the Brunei context. Segmentation has been found to strongly reflect the roles of labour market actors: employers, government and workers.

Generally, the volume, types and composition of foreign workers recruited into Brunei are basically consequent upon the changing structure of the local labour demand brought about by changes in the economic evolution of the country. This implies that the resultant contemporary labour migration is largely a demand-based approach, as suggested by Bohning (1984). The supply of labour from foreign sources that follows has prompted government actions to control and monitor their inflows in relation to the prevailing local labour market. It seems that

segmentation exists as a result of a set of processes brought about first, by employers powers through demand for workers; second, through the role of institutional bodies including notably the government’s labour laws and regulations, as well as selective labour supply system of labour agents and gang leaders; and third, the nature of local labour supply. It is argued in the thesis that the persistence of the roles played by these labour market actors through the mechanisms identified in Figure 3.1 results in a permanent segmentation of labour markets and employment structure in Brunei.

This study thus sees that segmentation is a consequence of the nature of labour demand (polarised) and supply (unpolarised) which leads to increased labour migration in the development process, a shortage of local manpower supply numerically and in skill qualities, and a result preference by employers for foreign labour. Equally important are the roles of government and private sector employing companies such as MNC. Thus the model developed in the thesis uses labour market actors because it is argued in the study that they are responsible for the interplay of the factors and mechanisms (illustrated in this chapter) which consequently create and maintain segmentation of different groups of workers in the Brunei employment structure. How the labour market actors do these is now examined.

CHAPTER FOUR: LABOUR MARKET DEVELOPMENTS AND EMPLOYMENT