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General Things We Should know About Economics

Economics is a social science that studies the behavior of human being reacting to a particular constrains to fulfill the individual desires (Ow, 2012). It is also defined as the science of choice. There are two different types of economics: microeconomics which focuses on the decision making behavior of an individual market or industry; macroeconomics is the study of the overall performance of an economy for a certain area.

Demand and supply is one of the most basic economic concepts. It shows us how the relationship between consumers and producers works (Sloman, 2008). Demand is the requirement or desire of consumer of a certain quantity of goods while supply is known by economist as the quantity producers are able to provide to the consumers. This relationship has shape the foundation of the economy.

The Shortage of Housemaids Stirs a Buzz in the Malaysia

The Demand of Supply of Full Time Housemaids Affect the economy of both Malaysia

Housemaids are a common practice in most countries in Asia which includes Hong Kong, Brunei, Thailand, Malaysia, Singapore and many more. According to Farlex (2013), housemaids by online definitions are females who are employed to do house works. Since 2009, the demand of housemaids in Malaysia has increase drastically until the local number of housemaids was not enough to satisfy the overwhelming demand (Au, 2012). Therefore, a few government departments as well as many private agencies were established to resolve this matter. The general solution was to bring in foreign housemaids from places such as Indonesia, Cambodia, Myanmar and Philippines. Now let’s analyze on how did the whole economy reacts to the situation of the shortage of housemaids.

The shortage of local housemaids can be seen in the graph below.

The graph above shows there is high in quantity demanded for housemaids, Q1, but low in quantity supplied, Q2. Therefore creating a shortage of supply where the price remains the same as the difference between the quantities supplied is less than the quantity demanded. The price is less than the equilibrium price where the demand curve intersects the supply curve. This is due to the market price

The following shows the process or how does the shortage occur through certain time period:

As the demand increase whereas the price remains the same, the demand curve shift to right. According to the graph, curve D1 shifted to D2 while the S curve representing the supply curve remain unchanged. The price of house maids remain unchanged creating a shortage in quantity of supply where the difference Q1 and Q2 represents.

To evaluate the cause of shortage of housemaids, the demand must first be observed. The main clients of housemaids or people who are paying for housemaids are parents with full time job that desire house to be well manage and their children to be taken care off. Why do parents in Asian countries now days require a full time job? This is because to the blooming economy, for example Malaysia and Singapore, requires them to support the increase in standard of living with equivalent income. Other situations such as many adults with old folks at home would also hire housemaids to take care of their parents for them as they need to work. As people nowadays are more educated, the number of non-working parents has decrease in the pass 2 decades. Generally speaking, as living standards increases, the more and more working parents hit the market to work for more income to support their lifestyles.

When shortage of housemaids occurs, the productivity of a certain household decrease as there is limited options to resolve everyday problems. Most modern day parents are working either part-time or full-time to provide income for their families. Housemaids are the main solutions to everyday chores and responsibilities. Thus, this also causes the overall production or efficiency of country decrease.

Although Malaysian government establish policies and laws to prevent the outflow of money to other countries, but the situation does not permit a strict enforcement. To work out the shortage situation, the government approves licenses for foreign maids to be brought in to cater to the demand of consumers. Housemaids from other countries such as Cambodia, Myanmar, Indonesia and Philippines are supplied to cater to the ‘addiction’ to maids in Malaysia. The government agencies as well as private sectors also see this shortage as a problem that need to be solved immediately. The number of day care centre and nurseries has increase drastically over the years also in areas such as Kuala Lumpur. According to the Department of Social Welfare (2013), the total number of day care centre and nurseries in Kuala Lumpur are 37 which show that a small area of containing such a large number of services. Other than that, the freelance part-time local housemaids have also become another alternative and also solution for a household that requires helpers to manage their house work.

Effects when Quantity Demanded is Fulfill

On the other hand, some social issues arise will still arise after the demand is fulfill. With housemaids taking care of their children, parents will be detached from their own kids (Wellsphere, 2008). As the times their child spends with them are less than the time spending with the maids, the children eventually becomes more attached to the maids. This has become a common and ever growing social issue that most household take lightly of. As detachments of parents with their own kids worsen, it often results into rebellious situation where children are not obedient to their parents. In addition, their parents might also unable to understand or relate to their child emotionally. Looking at the countries point of view, the increase in foreign workers in local market will contribute to the outflow of money from country. Because when the owners pay the maids their salary, more than often the money is sent back to their home country rather than spent on them. Furthermore, cases such as runaway maids and maid mistreating children increases will increase. This shows that other problem still arise although demand has been fulfill.

The increase of housemaids does still bring benefit to the household and the country itself. In terms of household, more parents are surely able to work outside not distracted by day to day chores at home. Parents with children are able to know that their child is well taken care of. These also leads to the productivity of country continue increasing as more labors are available in the workforce. This situation contributes to the blooming economy in the country. Thus enabling the increase of living standards as income of a family rises together.

The Constant Effects of Scarcity and Opportunity Cost

The following graphs show the difference equilibrium price and quantity between the years:

Note:

S = Supply curve

D = Demand curve

E = Equilibrium point

Ep = Equilibrium price

Ep = Equilibrium quantity

The numbers stands for the year. Eg: 1 = year 1

Both graphs show the increase in quantity demanded and supply and the difference in equilibrium price and quantity. According to the graphs, the difference between increases of equilibrium price of year 1 to year 2 is less than the increase of equilibrium quantity of year 1 to year 2. Same scenario goes to the year 3 and year 4. This shows as time progresses, the shortage is solved by adding more quantity supplied to quantity demanded. However, the price of housemaids will slowly increase as quantity supply is always not able to react fast enough to the quantity demanded.

As time progresses, the amount of supply of foreign maids slowly becomes in sufficient to cater to the demand of the consumers or clients (Fernandez, 2013). The concept of scarcity can be seen through that situation. Scarcities as define by Investopedia (2013) as limited resources but not a lack of riches, individuals are required to make choices between different items to fulfill their unlimited wants or desire. The demand for housemaids in Malaysia has increase to a certain amount where foreign workers are flooding the populations. This also resulted into the dependence or also known as ‘addiction’ to housemaids in countries like Malaysia (AFP, 2011).

https://www.youtube.com/watch?feature=player_embedded&v=-bG_mp8cAAw

Other interesting link:

http://www.youtube.com/watch?v=ruJn3uXlC-0

http://www.youtube.com/watch?v=jTnLDHZDsbI

The concept of opportunity cost also appears as the price to hire a maid has increase but still considered reasonable to the consumers as they see more benefit to hiring maids then having none. In-terms of the foreign maids penetrating the local market, the locals maid are seem to be losing out their jobs as the foreign maids are considered more cheaper and trustworthy due to the effects of limited supply of local maid the react to the constant and never ending demand of the local marketplace.

Long-term Solution for the Shortage of Housemaids

The increase of foreign housemaids is surely a short-term plan to increase the economy of Malaysia nevertheless long term issues society issues must be solve. Local companies should provide more flexible working hours for mothers or female workers as well as male workers to engage in family issues. Working at home would definitely be a better option as it provides an opportunity for parents to spend more time with their children as well as getting the job done. This is feasible now days as technology advances to a certain degree where everyone is connect by the internet. Works can be done easily online, in fact even more efficiently. The government should also keep in check the number of maids per household as well as the number of foreign housemaids entering Malaysia. This is to limit the money outflow from the country. Hence, the short-term plan must be replaced with long-term solutions.

Latest Housemaids Shortage Crisis Hits Malaysia

The never-ending increase local demand of housemaids has cause the Indonesian government to halt its supply of labors into Malaysia. This is because of multiple cases of mistreated maids that raise concern upon the foreign government (Yow, 2012). The households in Malaysia might be force to find alternatives for cheap household helpers. Although proposals have been given to solve the issue but the shortage will still increase for the coming few months before a solution or deal is confirm (Alhadjri, 2013).