KUALA LUMPUR, Dec 19 — Malaysian workers are more highly educated than their peers in Asean countries, but Malaysian firms also have a harder time finding employees with the right skills compared to their South-east Asian counterparts, a World Bank report has shown.
In the 15th edition of its biannual Malaysia Economic Monitor report, the World Bank noted that workers from Malaysian firms surveyed were, on average, more highly educated than their peers from some other countries, including high-income ones.
“In Malaysia, 81 per cent of surveyed employees had completed secondary education, compared to 76 per cent in high-income and OECD economies, 71 per cent in Asean economies and 66 per cent in China,” the report titled “The Quest for Productivity Growth” and launched today said.
Malaysian manufacturing firms surveyed had the highest number of workers with secondary education when compared against the two other regions and China.
The average number of years of education of the production workers in the manufacturing sector were similar for all four regions and countries at between nine to 11, while the number of secondary educated workers in the services sector for all four was also similar, the report showed.
The report cited data from the World Bank Enterprise Surveys, which had seen 1,000 Malaysian firms of varying size, business sectors and locations being polled in 2015 to 2016, while data from Asean countries were collected at approximately the same time.
For the Enterprise Surveys that is conducted every four to five years, the data from China is from 2012 and the date for the high-income and OECD countries are from the 2010 to 2015 period, the report said.
The countries in the Asean region used as a benchmark included Cambodia, Indonesia, Laos, Myanmar, the Philippines, Thailand and Vietnam; while the countries selected for the larger pool of the high-income and OECD category include Chile, Croatia, Czech Republic, Estonia, Israel, Latvia, Lithuania, Mexico, Poland, Slovak Republic, Slovenia, Sweden, Turkey and Uruguay.
The World Bank report said Malaysia may have a less dynamic labour market as Malaysian firms reported a lower vacancy rate compared to its Asean counterparts, with only 14 per cent of those surveyed having vacancies in the last two years while 25 per cent of the latter reported the same.
The World Bank’s calculations for vacancy rate is obtained by dividing the number of vacancies available by the firm’s size.
“Despite their lower vacancy rates, Malaysian firms were more likely to face difficulties in identifying workers with specific skills,” the report said, adding that smaller local firms were more likely to have such difficulties than big firms with at least 10 per cent foreign ownership.
The report singled out three out of the seven skills that Malaysian firms had the most difficulty in finding suitable hires, with between 79 and 85 per cent saying it was either difficult or very difficult to identify workers with the required technical, managerial and foreign languages skills.
There was also a higher proportion of Malaysian firms finding it difficult to find workers with interpersonal and writing skills compared to Asean firms surveyed, while it was similar for those seeking workers with IT skills and slightly lesser Malaysian firms had trouble finding workers with the suitable work ethic.
The report noted firms that had reported hiring problems had lower productivity levels, with the hiring issues consisting of few or no applicants, lack of suitably-skilled applicants, applicants that did not like the firm’s working conditions or were seeking a higher salary than the firm could offer.
Weighing in on the skill mismatches seen in Malaysia’s labour market, the World Bank report said this was not caused by the government under-spending for education and training as relatively generous allocations have been made.
It pointed out that the Malaysian government had in 2013 spent RM54 billion on education and training, with over RM4.1 billion spent on post-secondary vocational and technical education.
The report said data from Malaysia’s National Economic Return Survey suggests firms are resorting to training of their staff to overcome the skill deficits.
World Bank Malaysia lead economist Dr Julio E. Revilla, who was speaking at a panel discussion following the report’s launch, noted that Malaysia is doing relatively well in the four drivers of productivity — education, innovation, efficiency and infrastructure, but noted that productivity levels somehow did not follow the country’s performance in those areas.
“For instance, Malaysia spends significant amount of resources on education, the education level is probably not good enough in order to increase the level of productivity of some of the firms.
“But there are other countries with more important challenges on education somehow do better. So the question is probably not how much money is the government spending, but quality of how these resources are being utilised,” he said.
Federation of Malaysian Manufacturers immediate past president Tan Sri Saw Choo Boon also said it was disturbing that only 19 per cent of Malaysian employers provide formal training for their workers — a relatively lower number when compared to firms in Asean, China, high-income and OECD countries.
“I think this is quite disturbing, because I have seen many companies, they have human resource policies, they say minimum two-day training per year. Two days is actually very little,” he said during the panel discussion.
“I am not suggesting we force every company to spend two per cent of their budget on training but we need to work on this training, we need to incentivise companies to spend more time on training,” he added, having noted that the finance sector was most well-trained due to Bank Negara Malaysia’s requirement for two per cent of annual funds to be used for such purposes.
