Labour Efficiency In The Malaysian Oil Palm Plantations

A Data Envelopment Analysis (DEA) Approach

Abstract

Low levels of efficiency and productivity of the Malaysian oil palm plantations are associated with a persistent labour shortage. Hiring foreign labour is often seen as a feasible solution to support their intensifying oil palm production. However, their skills and experiences in the sector are crucial in sustaining the plantation efficiency and productivity. The study aims to analyse the level of labour efficiency and identify factors influencing labour efficiency in the Malaysian oil palm plantations. The cluster sampling was used to employ about 40 plantations from five plantation companies. Data were collected from the estate managers and analyzed using Data Envelopment Analysis (DEA). The findings revealed that the means of total technical efficiency (TECRS) and pure technical efficiency (TEVRS) were 0.7608 and 0.8573, respectively. A slack variable analysis reveals that the plantations had excessive labours from India (69%), Nepal (22.24%) and Bangladesh (14.39%). The study concluded that labour efficiency could be improved through hiring skilled labour and enhance on-field job training. Recruitment of labour by sourcing country could also help in selecting the best labour to recruit.