KUALA LUMPUR – A comprehensive rethink of immigration policies is crucial to extricate Malaysia from its dependence on low-skilled, low-wage foreign workers and attract and retain high-skilled talents.
This will facilitate the transition to an agile, resilient and future-ready workforce that includes the creation of high-skilled and high income workers such as mining engineers and information and communications technology (ICT) professionals, Bank Negara Malaysia (BNM) said.
Urgent steps must be taken to address skills mismatch prevailing in the country, it said in highlighting the case for labour market reforms in Malaysia in its Economic and Monetary Review 2023 report released today.
The central bank lamented that of great concern is the large number of existing pool of graduates being unsuitable for high-skilled jobs while firms face difficulties in filling existing high-skilled jobs.
Even worse, 55.7% of firms reported that they had difficulty finding employees with good interpersonal and communication skills.
One effective method to address skills mismatch, it said, is to promote greater cooperation between government, industry and academia to enhance the quality of higher education syllabus and workforce training.
Another area of concern is that by 2030, automation could displace up to 4.5 million jobs in Malaysia, with the risk of displacement highest in the agriculture and manufacturing sectors.
It said generative artificial intelligence (AI) is also expected to affect white collar knowledge workers who undertake tasks involving data analytics, pattern recognition and routine decision-making.
As if this was not enough, BNM said Malaysia is rapidly ageing, possibly becoming an aged society by 2044, leading to human capital constraints that could affect economic growth.
On a bright note, however, the central bank said that by end-2023, unemployment had returned to its pre-pandemic (2015‒2019 average) rate at 3.3% due to more jobs created from gig work, such as food delivery and e-hailing services.
Between the fourth quarter of 2019 and fourth quarter of 2023, the number of employed high-skilled workers rose by 6.6% to 2.19 million persons from 2.05 million persons, it said.
It also noted that the compensation of employees’ share of income in Malaysia is much lower than in most advanced economies, suggesting a relatively smaller share of the economic pie is going to workers.
Against such a backdrop of challenges and concerns, BNM said there is undoubtedly an urgent need for a comprehensive reform to Malaysia’s labour market.
Among other things, the central bank said policy strategies should ultimately lift wages and income of the people with the way forward being expediting the implementation of national strategic initiatives that will provide high-paying employment opportunities. – March 20, 2024