Building a resilient workforce


LABOUR market conditions and job creation are reportedly very important issues in the upcoming US presidential election. There have been concerns that jobs are leaving the US shores to other cheaper countries such as India and China, and it is not just about assembly jobs but also the white-collar high paying jobs. 

In Malaysia, there have been cases of investors packing their bags and heading towards lower-costs countries. Fortunately, the numbers are not alarming. During the period from January to Aug 7, 2004, about 1,023 workers were laid off due to relocation of firms to foreign countries, out of a total of 14,057 retrenched. This merely reflects the on-going structural transformation in Malaysia’s manufacturing sector, where labour-intensive industries will have to locate to cost competitive areas to stay afloat, while higher value-added activities can still operate in this country.  

Employment trends show an improvement from a low growth of 0.9% in 2001 to 3.4% growth in 2003. This indicates that the pick-up in the Malaysian economy in the past few years has led to some job creation. Over 327,200 jobs were created in 2003, up from a dismal 87,800 new jobs in 2001. 

In terms of job growth by sector, the manufacturing sector reported the fastest pace at 5% in 2003. This was followed by the finance and business services sub-sector which grew by 4.6%. We continue to see employment in the agriculture sector shrinking, despite a large number of vacancies in that sector, as there are not many locals who are interested.  

On the flip side, the unemployment rate has stubbornly hovered at about 3.5% during the past few years. Yes, the unemployment rate is still below what is considered as “full employment” where those who are unemployed are mainly workers in transition to new jobs or fresh entrants into the labour market. In fact, the unemployment rate reached 3.6% in 2003, the highest rate in about 11 years or so. 

But this is no cause for alarm, as it is still low by regional standards. In Indonesia and the Philippines, for example, the unemployment rate is at 9.8% and 11.4%, respectively. 

The employment share in the manufacturing sector has been increasing steadily since we started on our industrialisation drive. 

In 2003, the manufacturing sector has the single largest share of employment at about 30%.  

The services sector as a whole still holds the lead at 50%. In the medium-term, we can expect more jobs to be created in the services sector, while the share of jobs in the manufacturing sector will dwindle. 

One noticeable difference in the job requirement is that the manufacturing sector requires more technical knowledge while the services sector calls for relatively more “soft” skills such as communication and language skills. The mastery of the English Language and effective IT skills are becoming a standard requirement in almost any job. 

A disturbing trend in industrial countries is the widening wage gap between skilled and non-skilled workers. As industries are being progressively driven by high productivity, rapid technological advancements and global competition, the demand for skilled labour has been rising swiftly. Labour-intensive activities are relocated to cheaper countries, reducing the demand for less-skilled domestic workers. If left unchecked, this could lead to worsening income inequalities between the blue-collar workers and the higher paid skilled workers. 

In the pursuit of greater efficiency, there is a trade-off that will result in the displacement of lower skilled workers. In Malaysia, this problem is exacerbated by the presence of foreign workforce, which represents over 10% of Malaysia’s workers. Foreign workers are not just doing “3D” (dirty, difficult and dangerous) jobs in the construction sector, but are alsoin the manufacturing and services sectors where 22,063 of them were employed in 2003.  

According to data from the Labour Department, in 2003, 82.1% of registered job seekers have secondary school (SPM) qualifications or lower, while only 17.9% have higher secondary (STPM) or greater qualifications. Those with lesser qualifications and skill levels are particularly vulnerable to the vagaries in the job market. This is exacerbated by the fact that a large segment of the manufacturing sector is export-oriented, which means that the workers in this sector will quickly feel the heat in the wake of any global disruption. The consolation is that we have a large services sector where employment is somewhat less volatile. 

During a slack in the labour market, the government steps in to set up training programmes for unemployed graduates and retrenched workers. The results of the training and re-training in “soft skills” and IT have been quite encouraging. 

But there is only so much that the government can do to help displaced workers and unemployed graduates. More importantly, workers must realise that they need to subscribe to life-long learning to ensure that their skills are constantly upgraded and updated to remain marketable all the time. Someone has said, “The illiterate of the 21st century will not be those who cannot read, but those who cannot learn”. It is indeed unflattering to note that 80 % or so of the Malaysian workforce has less than tertiary level education. 

  • The writer is research fellow with the Malaysian Institute of Economic Research (MIER). 

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