MESYUARAT JAWATANKUASA PERANCANG PEMBANGUNAN NEGARA

1
REGIONAL CONFERENCE ON INVESTMENT CLIMATE AND
COMPETITIVENESS IN EAST ASIA
SESSION 3SKILLS FOR COMPETITIVENESS
ADDRESSING SKILLS GAP MALAYSIAN CASE STUDY
BY K.YOGEESVARAN (yogees_at_epu.jpm.my) ECONOMIC
PLANNING UNIT NOVEMBER 2005
2
ADDRESSING SKILLS GAP MALAYSIAN CASE STUDY

• OUTLINE
• Background
• Key Findings on Skills and Education
• Measures Introduced and Their Impact

3
ADDRESSING SKILLS GAP MALAYSIAN CASE STUDY

• BACKGROUND
• Productivity and Investment Climate Survey
  2002/2003 was undertaken in collaboration with
  the World bnk
• Objective - to identify key constraints to
  competitiveness
• Total of 1,151 firms were surveyed including 902
  firms in the manufacturing sector and 249 firms
  in the selected business support services sector

4
ADDRESSING SKILLS GAP MALAYSIAN CASE STUDY

• KEY FINDINGS
• Shortages of skills was reported as a pervasive
  problem
• Time taken to fill vacancies
• Market places a very high premium on tertiary
  education
• Higher education rates are lower than
  international norm.

5
ADDRESSING SKILLS GAP MALAYSIAN CASE STUDY

• KEY FINDINGS
• 2. Quality was of some concern
• There was a preference for foreign trained
  professionals
• Main deficiencies were English Language
  proficiency, ICT skills communication skills

6
ADDRESSING SKILLS GAP MALAYSIAN CASE STUDY

• KEY FINDINGS
• 3. Presence of skills/education mismatch
  especially at tertiary level
• Qualifications of unemployed not relevant to
  manufacturing sector
• Results in productivity loss

7
ADDRESSING SKILLS GAP MALAYSIAN CASE STUDY

• KEY FINDINGS
• Improvement in skills can result in substantial
  benefits
• Number of firms using training facilities are low
  especially among SMEs

8
ADDRESSING SKILLS GAP MALAYSIAN CASE STUDY

• MEASURES AND IMPACT
• Expanding the supply of educated and skilled
  human resource
• Increase in capacity of institutions of higher
  education
• Introduction of double-shift training facilities
• Impact
• Increase in labour force with tertiary education

9
ADDRESSING SKILLS GAP MALAYSIAN CASE STUDY

• MEASURES AND IMPACT
• Improving the quality of education and training
  delivery system
• Review of primary and secondary school curriculum
  including use English for Science and Math
• Increased collaboration between universities,
  industries and research institutions to address
  mismatch
• Introduction of the National Dual Training System
• Impact
• Duration of unemployed

10
ADDRESSING SKILLS GAP MALAYSIAN CASE STUDY

• CONCLUSION
• Inadequacy of skilled workforce and mismatch were
  identified as the main concerns.
• A range of measures have been introduced to
  address these concerns and improvement are
  already emerging.

11
THANK
YOU
www.epu.jpm.my
12
Assessing Skills Shortages Average Time to Fill
In Vacancies
Managers face acute shortages of skilled labour,
especially professionals
No. of Weeks to Fill in Vacancies
No. of Weeks to Fill in Vacancies
13
The Premium for Tertiary Education is High in
Malaysia
this premium is even higher than that in OECD
countries
The premium is high for tertiary education in
Malaysia
Annual rate of return to tertiary education
(percent)
Secondary
Tertiary
Primary
Source Psacharopolous and Patrinos (2002) and
The World Development Indicators (April 2003,
PICS Manufacturing Data for Malaysia
Source Malaysia PICS 2002, World Bank
14
Malaysias Higher Education Stocks Lag Behind Its
Level Development
Malaysias higher education rates are lower than
the international norms
of Population gt Age 25 with Higher Education
Complete, 2000
20
Korea
18
16
Philippines
14
Canada
12
Thailand
Chile
10
8
6
Malaysia 2000
4
India
Malaysia 1990
China
2
Malaysia 1980
0
6
9
10
11
7
8
Log of Real Per Capita GDP in 2000
15
Benefit from Addressing Skills Constraints

• Econometric estimates suggest that addressing the
  skills constraints can provide large benefits to
  firms, raising the sales of most industries by 11
  per cent of sales on average
• The rate of return on training is also large, 10
  per cent in terms of higher wages for
  manufacturing workers with any training

16
Investment climate Skills GapUtilisation of
Skills and Technology Development Institutions
Number of firms that uses the skills development
institutions is low, especially among the SMEs
Firms That Report Using The Institutions
SMEs
Large

• Skills development
• institutions
• Technology support
• institutions
• Technology
• incentives

14.7 14.5 1.2
39.1 17.4 11.4
Firm Using Skills Development Institute
17
Output from higher education institutions,
especially prublic institutions increased
dramatically after 2002
Number of Persons (000)
18
Output from both public and private training
institutions increased since 2000
Number of Persons (000)
19
The share of labour force with tertiary
qualification has increased since 2000
of Labour Force
20
The percentage of graduates who are unemployed
for more than six months has declined since 2000
of Unemployed Graduates