Many people observe Labour Day as yet another holiday on the calendar. But for a Malaysian economist, the celebration marks the 16.2 million workers that drive the national economy.
It is undeniable that our workers are key towards reaching our aspiration to become a highly advanced nation. However, Malaysia still faces two major labour challenges, which are the quality of the employment and the quality of reward to the workers.
According to Malaysian Institute Of Economic Research Former Senior Research Officer Samirul Ariff Othman, this is not a new problem, being identified even before the pandemic.
During the Covid-19 pandemic, unemployment peaked in May 2020, at 5.3%, with a total of 8,261,000 people. The latest statistics (February 2023) showed over 592,000 Malaysian being unemployed, with the unemployment rate dropping to 3.5%.
“With the unemployment rate of 3.5%, Malaysia can be considered to have reached full employment. Note that full employment is achieved when the rate drops below 4%,” Samirul said.
He added that this is a sign of macroeconomic recovery, with Malaysia reverting to pre-pandemic economic status. According to him, 1.9 million workers out of the 16.2 million are considered under employed by skill. In other words, workers who possess a tertiary education but work in jobs that are below their qualification.
Every year, the number of workers who cannot take advantage of their educational qualifications is increasing. In 2017, only 1.3 million people were in this category.
He said this growing trend must be addressed immediately, saying that it is a loss to the country and its workers when their skill cannot be fully utilised.
What is more disturbing is that at the same time, only 28% of Malaysian workers are categorised as skilled workers, while 60% are semi-skilled workers, and 12% are low-skilled workers.
To become a developed country, Malaysia needs more skilled workers. Countries under the Organisation for Economic Co-operation and Development (OECD) have approximately 40% skilled workers.
“Salaries and wages are among the important measures of an employee’s welfare,” he said, adding that about 35% of the nation’s income enters the pockets of workers.
The rest were channelled to the employers or capital owners. On the other hand, workers from developed countries such as the United States and the UK earn about 55% and 53.4% of the nation’s income. Samirul pointed out that wage trends are also worrying, being generally constant. He said it is increasing but at a slow rate.
“In 2010, the average wage rate for workers was RM1,500, now it is RM2,250. Wage rate stability is more pronounced for semi-skilled and unskilled workers,” he said.
“The commitment of the Minister of Economy to increase the income of Malaysians is the right effort and we welcome it,” he said.
“Understand what is limiting salary and wage growth. Set targets, form effective strategies, implement and report achievements,” said Samirul, who reiterates that workers are the driving force of the Malaysian economy.
