the rural income distribution among the Malays worsen over the 1976-1990 period, that of the Chinese is about stable, and only the Indian rural income distribution improved, and even then to a lesser degree than the improvement in its urban distribution.
However, the continuing influx of migrant workers, both legal and illegal, from neighbouring countries most likely has denied local labour force the fruits of rapid economic growth in the country since late 1980s. The constant inflow of immigrant labour continues to replenish the pool of unskilled labour and thus rapid industrialization fails to generate rapid rising wages among the unskilled. Under such conditions, stable or small increase in real wages for the unskilled labour could concede with rising per capita incomes, tending to create more inequality.
Unlike South Korea and Taiwan, there is also the limited expansion of flexible social corporatism at the level of firms in Malaysia. In high technology export-oriented firms (semi-conductors in particular), such developments have emerged quite strongly to stimulate cooperative behaviour in skills enrichment and remuneration growth (see Rasiah, 1995: Rasiah and Osman, 1996). Most other sub-sectors have not experienced similar levels of growth in skill requirements, though, governmental emphasis (through the human resource development fund in Malaysia) and external competition has pressured higher skills requirements. The rising demand for skilled labour in Malaysia has pushed up wages of skilled manpower substantially. The expansion, however, has created sharp wage differentials between skilled and unskilled categories, which was exacerbated by massive inflow of foreign labour from Indonesia and Bangladesh mentioned earlier. Governments in Malaysia is currently working on stepping up the supply of skilled labour to meet the needs of technological deepening. Meanwhile, the growing wage differentials between the occupational categories, among other things, is reflected in the worsening income inequalities in Malaysia.
