AUG 25 — The recent announcement by Human Resources Minister Steven Sim Chee Keong that employers will be allowed to use their Human Resources Development (HRD) levy contributions to pay graduate salaries, instead of limiting the fund to training, signals a major milestone (possibly a crisis) for the country’s training sector.
Since 1992, employers have been required to contribute between 0.5 to 1 per cent of employees’ salaries towards a fund which can be drawn on for employee training.
Over more than 30 years, there remains up to RM2 billion which, according to Sim, must now be unlocked to help companies hire Malaysian graduates, tackle brain drain and so on.
One can only speculate, but presumably the government feels the problem of fresh grad unemployment can be (painlessly?) resolved by granting companies access to the HRD funds (and RM2 billion is no small amount).
The benefit to fresh grads and brain-drain slowdown notwithstanding, the huge question now is what’s going to happen to the training sector for whom the HRD funds have been a critical source of revenue?
It doesn’t take a corporate genius to guess that employee training is hardly a huge priority among most organisations.
And you can’t necessarily blame the bosses. Especially given a difficult economic climate, very few CEOs are going to insist on spending money to take staff away from their workplace to attend a class whose learning outcomes are almost never immediate.
Why spend money to send people away (sometimes for days) doing something with no instant payback to the company?
Funny thing is, this attitude is often reflected among employees themselves. As a former manager in charge of training, I’ve always found it kind of cute that 60-70 per cent of training requests will normally come at the second half of the year.
You can surely guess why. Somehow training is never important enough for most workers to apply for courses as early as possible.
It tends to become something for which department heads need to push people to do. “Hey, cepat pergi training, kalau tak pergi KPI tak cukup!” (smile)
With the latest development, I’m curious as to whether training will even make it into employee KPIs anymore.
Very likely it’ll become optional, especially among companies struggling financially (which will almost certainly use the funds for salaries instead).
Overall, will corporate training in Malaysia fall like something in those egg-drop team-building games? Does the latest government announcement sound the death knell of training in the country?
Whilst it’s unlikely to be that dramatic, there is no doubt that training companies will be facing a crisis.
Any training provider whose strategy is primarily about tapping into HRD funds may start to feel like a taxi company in the face of Grab and Uber.
I can’t predict what’s going to be urgently discussed in these companies’ boardrooms now but I’m guessing ideas like strategic partnering and collaboration (with clients to do a lot more than provide training), cost-“flexibility” (that huge elephant in the room) and programs focused on graduates (for obvious reasons) are going to have to be on the agenda.
Maybe this isn’t a bad thing, but I guess trainers charging organisational arms and legs for their five-star courses will need to review their budget and promotional documents.
If there’s a clear positive from Sim’s announcement, not unlike any typical austerity drive, the conspicuously needless and expensive will be chopped and some much needed attention redirected towards what’s most important.
Most importantly, how do you retain corporate interest in training when the #1 source of funds is no longer mandated towards training?
I’ll say right now I have no idea but if the country is to avoid a fallout of training providers, I hope these training companies and trainers do.
