JUNE 19 — The Ministry of Human Resources (MoHR) 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 the employers utilize for the benefit of their employees and employers will typically use the levy as their annual training budget.
However, the recent circular 2/2022 from HRDC dated 15 June 2022 stipulates that HRDC will charge employers a micro-credential fees of RM300 per trainee per training for almost all training conducted (a copy of the circular is attached for your perusal).
This effectively means that the employer will be upskilling less people in the organization for the same amount that they have been contributing to HRDC on an annual basis.
Why do I say that? Example, An employer with annual contribution of RM144k used to be able to conduct 12 sessions of 2-day training (assume RM6k/day X 2 days = RM12k / session for 20 pax) With this new circular, it means the employer will now be only able to conduct 8 sessions of the 2-day training (RM6k/day X 2 days + RM6k for micro-credential = RM18k / session) This means, if previously an employer is able to upskill 240 pax, they are now only able to upskill 160 pax.
A 33 per cent reduction in people being upskilled in an organisation! Let’s take the annual contribution from all employers to HRDC to take a look at the impact to a broader nationwide perspective.
In 2019, the annual contribution is RM900 million.
Using the same formula as outlined above, this means that the said amount will be able to fund around 75,000 sessions per year.
With micro-credential cost factored in, this goes down to 50,000 sessions per year.
Assuming each session is filled with 20 pax, this means that we will have 500,000 fewer employees being upskilled annually.
500,000 employees not receiving upskill opportunity annually at the expense of getting micro-credential.
Will micro-credential move our people capabilities to the next level to progress Malaysia to become more competitive? The answer lies with the employer.
As a HR Leader within a MNC, we are more focused on actual skills acquisition rather than certificates (caveat ; certificates in some technical area are valuable, but NOT all areas) We are more concerned about how employees are able to deliver actual value into business through their capabilities and skills rather than bringing certificates into the business.
It may not be obvious now but I can imagine the kind of difficult conversation my fellow HR Leaders will encounter with their respective MDs and Country Heads, trying to explain as to why they will now be forced to upskill fewer people while paying the same amount to HRDC.
And why training budget will need to be revised halfway through the fiscal period to execute activities planned earlier 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 being a profit centre. The interest of the regulator can take precedence over its main contributing stakeholders’. The employers are compelled by law to contribute and now the employers have no say on how to train their employees.
Revenue streams are created by enforcing unilaterally new policies and regulations which favours the regulator at the expense of the stakeholders’ interest and potentially, Malaysia’s long-term competitiveness from people capability viewpoint.
With most businesses struggling with post Covid-19 effects such as increased costs due to the weak demand, global logistics backlog, raw material shortages, increased minimum wages and supply chain chaos, HRDC appear to be oblivious to the ramification of lower quantity of quality talents to businesses suffering from the above.
While the MEF, FMM, SMEAM, MIYDF, and other d representatives on the HRDC board may have been consulted, the depth of information provided to them may be inadequate.
Furthermore, HRDC needs to recognise the fact that the Foreign Direct Investors have their own trade and business chambers namely the American Malaysian Chamber of Commerce (AMCHAM), Malaysian Italian Chamber of Commerce (MITCCI), Malaysian German Chamber of Commerce (MGCC), Japan Chamber of Commerce and Industry of Malaysia (JACTIM) and others.
Please engage and collaborate with all stakeholders including foreign chambers before making unilateral decision which will be akin to shooting our own foot.
The loss of 500,000 sessions up to a value of RM300 million employer’s money meant for development of their own talents can create frustrations and loss of confidence on our talent competitiveness, from our stakeholders.
Therefore, what we need is HRDC to engage and facilitate rather than frustrate the foreign and domestic stakeholders if we value and welcome them.
* This is the personal opinion of the writers and does not necessarily represent the views of Malay Mail.