Manufacturing sector at risk of losing talent over low wages

Supporting local talent: Liew (left) receiving a token from Datuk Seri Wong Siew Hai, president of Malaysia Semiconductor Industry Association, at the forum. — ART CHEN/The Star

KUALA LUMPUR: Many Malaysian companies have become excessively reliant on cheap unskilled foreign labour, resulting in low median wages in manufacturing, says Liew Chin Tong.

The Deputy Investment, Trade and Industry Minister said the current average salary for such jobs in Malaysia was only RM2,250, lower than the general median wage of RM2,400 across all sectors.

Addressing the low median wage for manufacturing jobs would be the next step in developing the Electrical and Electronics (E&E) sector, he added.

Liew said this disparity of low pay for skilled labour would cause local talents to either work in other countries with higher pay or take on low-skilled jobs that either had a similar or higher salary.

He noted that the manufacturing sector in most developing or developed countries tended to have the highest median wages as it was usually the most advanced sector in their economy.

“While improvements must be made to our science, technology, engineering and mathematics education and talent pipeline, there has to be a mindset shift to acknowledge that Malaysia is not an isolated labour market and our talent can be lured elsewhere with higher pay, like Singapore.

“This is exemplified by many skilled technicians and operators turning to gig work like food delivery to make a living,” he said in his keynote address at the Malaysia National E&E Forum 2023 here yesterday, Bernama reported.

On this, Liew called on local E&E industry players to take up the challenge of scaling up their operations, which would create better-skilled jobs that could offer better wages to ensure economic security and inclusivity for all.

On the possible cost-efficient methods to scale up operations, he advised E&E players to make use of the existing local precision engineering industry.

“Acquiring automated machine tools from highly developed countries like Germany and Japan tends to be too expensive for most local industry players.

“We have the capability to produce automated machines at a highly sophisticated global level through a number of successful local companies such as Greatech Engineering, ViTrox, Pentamaster and many others.

“They mostly operate under non-disclosure agreements, so their collective capability is not well known; however, they will be the backbone of forming a critical and highly resilient supply chain for the local semiconductor industry,” he said.

Liew said doing so would be essential as Malaysia remained at the centre of the ever-growing global chip-making supply chain, which he described as the “oil” of a new era.

“The local semiconductor sector contributes nearly 25% of national GDP and 38.2% of our total exports in 2022, as well as holding 8% of global market share and contributing up to 23% of the United States’ semiconductor trade.

“We are now deep in a new era where semiconductors are becoming a source of conflict between nations due to their usage in nearly everything electronic, from weapons to cars to even watches.

“As such, industry players, together with the government, must do our part in ensuring we do not lose our global place in such an important market,” Liew added.

The forum, organised by the Malaysia Semiconductor Industry Association, saw the attendance of over a hundred E&E industry players and stakeholders who held panel discussions on the state of the industry and shared best practices for developing the local industry.

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