Malaysia Budget 2020 to get more locals trained and employed: study

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Thanks to Malaysia’s Budget 2020, Malaysian companies can look forward to a more highly-skilled labour force, and hiring incentives when recruiting locals in the new year.
DECEMBER 31, 2019 - 10:42 AM

THANKS to Malaysia’s Budget 2020, Malaysian companies can look forward to a more highly-skilled labour force, and hiring incentives when recruiting locals in the new year.

This comes from a research study published by the ISEAS-Yusof Ishak Institute and written by a guest writer, Yeah Kim Leng, director of the economic studies programme at Jeffrey Cheah Institute on Southeast Asia at Sunway University, Malaysia.

The recently unveiled Malaysia Budget 2020 aims to tackle long-standing issues of high reliance on unskilled foreign workers, low skilled wages, obsolete employment laws, low female labour force participation, and high youth unemployment, the study noted. 

To address these pain points, the Malaysian government has introduced a special job programme: Malaysians@Work, which will equalise hiring costs and increase job opportunities for graduates, women, and Malaysians. 

Companies will receive a monthly incentive of RM250 (S$82) for each Malaysian worker hired, while local workers who are replacing foreign workers will receive for two years a monthly wage incentive of RM350 to RM500, depending on the sector they are working in. 

A similar amount of wage and hiring incentive is also in place to get companies to employ more local graduates, women who have stopped work, and student interns. 

This comes as a recent report by the Organisation for Economic Co-operation and Development (OECD) highlighted that, in 2017, 13.4 per cent of Malaysian workers were over-qualified, higher than the European average of 11 per cent. 

“The presence of over-qualification in the Malaysian workforce is consistent with the inability of the labour market to absorb all the higher education graduates,” said the report. 

The OECD report also noted that only 55.2 per cent of working-age women are active in the labour market, compared with 80.4 per cent of men - a larger gap than the OECD average.

Prof Yeah said: “(The Malaysians@Work programme) is a creative approach to equalise hiring cost between local and foreign employees.”

“While it is difficult to gauge the efficacy of the fiscal incentives... to address the structural issues facing the labour market,” he said. “The short-term measures can facilitate the gradual shift in the structure of the economy toward higher value economic activities, which in turn is dependent on the quality and quantity of investment and the availability of skills and trained manpower.”

Indeed, the Malaysian government has pledged to continue investing in human capital development. 

It has allocated RM67.9 billion to education and training, clocking a bigger year-on-year increase of 5.1 per cent than 2019’s 3.1 per cent rise, noted Prof Yeah in the study.

To encourage technical and vocational education and training (TVET), the government will provide matching grants for customised courses with industries, allow Employees Provident Fund withdrawals to take professional certification related to Industrial Revolution 4.0 (I4.0), and create pathways for TVET holders to pursue degrees through the Malaysia Technical University Network. 

However, Prof Yeah said: “Thus far, the sustained high allocation for education is not commensurate with the expected outcomes, particularly in producing graduates in the STEM (science, technology, engineering and mathematics) fields.”