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A group of construction workers in Malaysia

Report: Malaysia’s transformation plan has failed to create more high-skilled jobs



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According to Penang Institute’s Kuala Lumpur general manager Ong Kian Ming, the Economic Transformation Programme (ETP) has failed to create more high-skilled jobs in the labour market.

Launched in 2010, the ETP was formulated as part of Malaysia’s National Transformation Programme to elevate the country to developed-nation status by 2020, targeting GNI per capita of US$15,000.

However, the latest Informal Sector Workforce Survey Report showed that workers in the informal sector have increased from 9.3% in 2012 to 11.4% to 2015, with a 10.3% CAGR over the same period.

In addition, there is also an increase from 34% to 44% in women in vulnerable employment. While this increase might hint toward more women participating in the economy, the report showed that “many of them are still engaged in less productive, poorly paid work”. These numbers are also a worrying reflection of the growing proportion workers that are employed with little social or legal protection.

At the same time, the gap between tertiary unemployment (3.8% in 2015) and the overall unemployment rate (3.2%) has also grown. One reason for this increase is due to the mismatch between job qualifications and type of available jobs. As the number of high-skilled jobs couldn’t keep up with the growing number of graduates entering the workforce, it also highlights the problem of unemployed Malaysian graduates.

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In addition, the report has brought focus on the problem of “downward wage pressures at the lower end of the salary distribution scale” due to absorption of low-skill jobs by foreign workers. The report showcased how the last five years have seen “foreign labour rose from 1.8 million to 2.1 million, excluding undocumented workers, which command an estimated figure of 1 million, possible much higher”.

According to the report, 317,000 of 2.2 million new jobs created in the economy have been captured by the foreign workforce, making it about 14.4% of new jobs to be concentrated in elementary sectors such as agriculture, construction and manufacturing.

With the unskilled workers feeling the impact, this results in the high numbers of Malaysians with pre-tertiary qualifications applying for low level positions within the civil service.

To resolve these challenges, Ong has encouraged the government and the private sector to work together in limiting the intake of foreign workers, including by putting a cap in the number of intakes and gradually increasing the levy on foreign workers. Additionally, he mentioned that there should also be “greater industry-college linkages especially for the Technical and Vocational Education Training (TVET) institutions”.

Photo / 123RF

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