MALAYSIA’S Human Resources Ministry needs to urgently revisit the founding principles and objectives of the Human Resource Development Corporation (HRDC). The HRDC was incepted in 1992 with the main aim of encouraging employers to provide learning and development opportunities for their employees to address productivity needs through the imposition and collection of a human resource development levy by establishment and administration of the fund.
It is imperative to note that levy payments made to HRDC are payments made to a consolidated fund which employers utilise for the benefit of their employees; employers will typically use the levy as their annual training budget.
However, the recent circular 2/2022 from the HRDC dated June 15, 2022, stipulates that the HRDC will now charge employers a microcredential fee of RM300 per trainee per training for almost all training conducted.
This effectively means that employers will be upskilling fewer people in their companies for the same amount that they have been contributing to the HRDC on an annual basis.
Why do I say that?
Example: An employer with an annual contribution of RM144,000 used to be able to conduct 12 sessions of two-day training (assume RM6,000 a day X two days = RM12,000 per session for 20 people). With this new circular, it means the employer will now only be able to conduct eight sessions of the two-day training (RM6,000 a day X two days + RM6,000 microcredential fee = RM18,000 per session). This means if previously an employer is able to upskill 240 employees, they are now only able to upskill 160. That’s a 33% reduction in the number of people being upskilled in an organisation!
Let's take the annual contribution from all employers to the HRDC to take a look at the impact from a broader nationwide perspective: In 2019, the annual contribution was RM900mil. Using the same formula as outlined above, this means that the said amount would have been able to fund around 75,000 sessions per year. With the new microcredential fee factored in, this goes down to 50,000 sessions per year. Assuming each session is filled with 20 people, this means that we will have 500,000 fewer employees being upskilled annually. That’s 500,000 employees NOT receiving upskilling opportunities annually because of the microcredential fee.
Will the microcredential fee move our people’s capabilities to the next level so Malaysia can become more competitive? The answer lies with the employer.
I am a human resources leader in a multinational corporation, where we are more focused on actual skills acquisition rather than certificates (caveat: certificates in some technical areas are valuable, but not in all areas). We are more concerned about how employees are able to deliver actual value into the business through their capabilities and skills rather than accruing certificates for the business.
I can imagine the kind of difficult conversations my fellow human resources leaders will have with their managing directors and country heads in trying to explain why they will now will be forced to upskill fewer people while paying the same amount to the HRDC. And why the training budget will need to be revised halfway through the fiscal period to execute already-planned activities which will now impact the sensitive topic of profit and loss.
This is no small matter which can be swept under the carpet as it is going to increase the cost of doing business.
This is the danger when a regulator unilaterally changes its focus to become a profit centre – the regulator’s interests can take precedence over its main contributing stakeholders’. Employers are compelled by law to contribute and now employers have no say in how to train their employees.
Revenue streams are created by unilaterally enforcing new policies and regulations which favour the regulator at the expense of the stakeholders' and, potentially, Malaysia’s long-term competitiveness. The HRDC appears to be oblivious to the ramifications of a lower quantity of quality talents for businesses struggling with post Covid-19 effects.
While the MEF (Malaysian Employers Federation), FMM (Federation of Malaysian Manufacturers), SMEAM (SME Association of Malaysia), MIYDF (Malaysian Indian Youth Development Foundation) and other representatives on the HRDC board may have been consulted, the depth of information provided to them may have been inadequate.
Furthermore, the HRDC needs to recognise the fact that foreign direct investors have their own trade and business chambers, such as the American Malaysian Chamber of Commerce, Malaysian Italian Chamber of Commerce, Malaysian German Chamber of Commerce, Japan Chamber of Commerce and Industry of Malaysia and others. Please engage and collaborate with all stakeholders, including foreign chambers of commerce, before making a unilateral decision which is akin to shooting ourselves in our own foot.
The loss of 500,000 sessions up to a value of RM300mil of employers’ money meant for the development of their own talents can create frustrations as well as a loss of confidence in the competitiveness of Malaysian talent. What we need is for the HRDC to engage and facilitate rather than frustrate foreign and domestic business stakeholders if we value and welcome them.
DISAPPOINTED MNC HR DIRECTOR
George Town
