By Jason Loh and Sofea Azahar, the research team at EMIR Research.
In his op-ed, “Getting Malaysia ready to ride the post-pandemic economic waves”, Finance Minister Tengku Zafrul mentioned about the need to shift to a tech-driven economy. This requires preparing the country in terms of high-skilled and technologically-productive capacity that should allow us to make the next jump.
Moving Malaysia up the value chain entails not only producing more highly-skilled graduates and technicians, but equally crucial skills that enable us to be at the “higher” end of the entire supply chain, namely in terms of research & development (R&D) which translates into original design manufacturing (ODM), e.g in robotic technology such as unmanned aerial vehicles/UAV and drones.
Traditionally, we have always been at the forefront in the design of Intel’s core microprocessors (also known as the CPU/ central processing unit) which runs on a chipset enabling the functioning of a computer (via programming language executions of algorithms based on bits of 0 and one as rudimentary form of data representation and measurement).
Penang hasn’t been just the leading centre and hub for manufacturing microprocessors (and semiconductors, PCBs/printed circuit boards, solid state drives/SDD – storage device using flash memory, etc.) but also its design since 2001 (see e.g., “Growing with Global Production Sharing: The Tale of Penang Export Hub, Malaysia” by Prof Dr Prema-chandra Athukorala).
Notwithstanding, as it is, we still don’t have enough highly-skilled and skilled workforce. And the existing pool would still need to move up the productivity chain with upskilling, reskilling and cross-skilling (i.e., moving from one specific skills to another within the overall production and manufacturing domain to adapt to supply chain reconfiguration).
According to World Bank Malaysia’s latest report, “Aiming High – Navigating the Next Stage of Malaysia’s Development” (2021), about 40 percent of the workforce in the mainly developed countries of the Organisation of Economic Cooperation and Development (OECD) are employed in high-skilled jobs, “with the level standing at an average of 34 percent for economies that have transitioned to high-income status within the last 30 years.
And for Malaysia “to reach the same level as that of the average OECD country, we would need to create around 2 million additional high-skilled jobs (p. 115).
Producing a high-skilled labour force is one of the goals to be achieved by Malaysia but it seems close yet so far. In the Shared Prosperity Vision (SPV) 2030, a target has been set at 35 percent for the share of highly-skilled workforce.
Based on the chart below, it can be seen that the labour force remains populated by semi-skilled workers over the years whilst there have been shortages of skilled workers.
Based on the statistics by the Department of Statistics Malaysia (DOSM) (chart below), the largest share of Malaysia’s labour force consists of workers with secondary-level education rather than the tertiary-level graduates who are either diploma or degree holders.
For instance, in 4Q20, 54 percent of the country’s labour force only had secondary-level education while 33.5 percent had tertiary-level education – a huge 20.5 percentage point difference.
Although we can see that the share of tertiary-level graduates is fairly increasing over the quarters, the portion of those who attained secondary level education remains the biggest, a worrying trend in efforts to produce a skilled workforce.
According to the OECD, the number of students enrolled in tertiary education is an indicator of a country’s future potential for a skilled workforce.
Data from the World Bank shows that enrolment rate for tertiary education is 43 percent as of 2019, which is significantly lower than the enrolment rate in some advanced economies – South Korea (96 percent), Singapore (86 percent), Estonia (70 percent). Even in several developing economies, the rates are higher than Malaysia such as China (54 percent) and Thailand (49 percent).
Another finding from the quarterly employment statistics that are in line with the education status of Malaysia’s labour force can be observed from jobs that had been filled.
Looking at the trend, the share of jobs which had been filled is the largest within the semi-skilled occupations which are also known as non-graduate jobs (chart below). Therefore, by relating the education attainment with the jobs filled, it makes sense that the majority of workers are located in jobs that are at risk of being displaced by technology and digitalisation.
Based on the chart below, it appears that the creation of skilled jobs started to come down significantly after 1Q20 whereas the share of semi-skilled jobs created went up substantially. This is likely due to the heavy blow caused by the pandemic which led to firms undergoing cost-cutting measures, thus, offering jobs which do not come with really high wages.
Therefore, some of the policy recommendations in the push for a highly-skilled workforce – tasked with engineering the economy into the Fourth industrial Revolution (4IR) should include:
1. Continuously reforming the education system to reflect and meet industry and market needs. For example, according to Chua Ooi Hock, senior design manager of Intel Corporation’s Penang CPU development team, our current university curriculum is not properly fine-tuned to the industry. He urged the need to work with the universities and reworking the curriculum. One of the ways is to have collaboration programmes especially on the research projects.
The education system and education policy, therefore, need further revamping and fine-tuning – so that a new generation of high-skilled workforce can be produced on a larger scale.
At the same time, the technical and vocational training (TVET) system needs to be elevated and given greater recognition as on par with a college or university qualification in relation to IT, digital and high-tech courses. Towards that end, our TVET system needs to be also upgraded and enhanced to meet industry and market needs.
This can be done by fostering and forging strategic and closer collaboration between the TVET system and the industries, especially including the green and renewable technology players. We could also adopt Germany’s TVET system – where the students have the choice to enter into an education pathway to spend 60 percent of the time outside the classroom (apprenticeships and on-the-job training under a certified supervisor/ trainer/ mentor) and 40 percent in the classroom.
This system should complement and supplement the current pathway that is being charted and spearheaded in the form of a public-private partnership/PPP – synergising the role of industry (private sector) in the form of Industry Lead Bodies (ILB) in strategic coordination with and under the auspices of the Skills Development Department, Ministry of Human Resources (MOHR).
2. In terms of existing workforce, the Human Resources Development Fund (HRDF) as a key government stakeholder should play a more prominent and pro-active role in directing, managing and coordinating the provision of upskilling & upscaling as well as cross-skilling and re-training across the industries and sectors.
HRDF together with the industry and sectoral stakeholders (with representatives from the Malaysian Employers Federation/MEF, Federation of Malaysian Manufacturers/FMM, National Productivity Council/NPC, etc.) should enhance and boost the training and re-training schemes nationwide provided by the Sectoral Training Committees (STCs).
As such, the HRDF should work with the Ministry of Science, Technology & Innovation (Mosti), Ministry of International Trade & Industry (Miti), Ministry of Environment and Water (Kasa) and Ministry of Energy & Resources (Ketsa) to produce upskilling, reskilling and cross-skilling programmes that are aligned, integrated and fine-tuned with the respective national policy frameworks.
Examples are the strategic convergence of the “Industry4WRD: National Policy on Industry 4.0” and the National Automotive policy (NAP) 2020 both under Miti and the Green Technology Master Plan Malaysia (2017-2030) under Kasa in e.g., in the capacity-building for production of electric vehicles (EV).
Capacity-building of talent pool to enable the transition to a high-skilled economy involves an “all of government, whole of society” approach – where the human and economic resources are strategically geared towards the goal – of making that quantum leap in our national transformation.