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WHY MALAYSIA NEED SKILLED WORKFORCE?

Malaysia aspires to move up the value chain to become a high-income economy.  A skilled workforce is critical to achieving this goal. Consequently, it is important to increase the enrolment in Technical Education and Vocational Training (TEVT) and raise the overall training quality.

Traditionally, labour demand and supply have been growing annually at 2%. With the introduction of the National Key Economic Areas (NKEAs), demand is expected to outgrow supply. By 2020, up to an additional 3.3 million jobs will be created, of which 1.3 million will be TEVT-related. However, based on historical trends, it may be challenging for the current TEVT sector to meet the demands of a high-income economy.

Malaysia aspires to move up the value chain to become a high-income economy, with a GNI per capita of approximately USD15,000.00 by 2020. To realize this ambitious goal, the Malaysian GDP will have to grow at an average rate of 6% per annum until 2020.

Four key thrusts have been launched to achieve this vision – the New Economic Model (NEM), the Government Transformation Programme (GTP), the Economic Transformation Programme (ETP), as well as the 10th Malaysia Plan. Within these thrusts, plans, programmes and initiatives have been mapped out.

To realize the ambition of becoming a high-income economy, Malaysia will need to have a workforce that is equipped with the necessary skills and knowledge to support and drive the economy. Currently, only ~20% of the workforce has post-secondary qualification, a proportion that lags well below that of developed nations. Moreover, the economy will require a larger workforce. While labour demand and supply have been growing annually at 2%, the twelve National Key Economic Areas (NKEAs) – as outlined in the ETP – are expected to create up to an additional 3.3 million jobs by 2020. Approximately 1.3 million (40%) will be TEVT-related.

The three main sectors that will require a large number of TEVT graduates are Tourism, Retail and the Greater Kuala Lumpur initiative.

Consequently, it is important to increase the enrolment in TEVT and raise the overall training quality to ensure the economy has suitably-skilled human capital. While the twelve NKEA sectors project a need for 1.3 million TEVT graduates, recognizing that there is demand for TEVT graduates in non-NKEA sectors and that TEVT graduates may continue to further their education, this study projects that 1.6 million TEVT graduates are required by 2020.

Mapping these projections against the current capacity of TEVT institutes reveal that the current capacity is insufficient to meet the needs of the economic transformation. Extrapolating from current rates of graduation, of the 1.6 million required TEVT graduates, public and private institutes are able to fulfil 750,000 and 450,000 respectively.

By optimizing the capacity and taking into consideration planned expansion of public institutes, another 140,000 graduates can be produced. This leaves a

supply-demand gap of 260,000 graduates until 2020. On an annual basis, the supply gap translates to a need for approximately 50,000 additional seats or 25,000 – 30,000 graduates per year.

However, since 2005, the number of graduates across all levels has been stagnant, despite various policy recommendations aimed at increasing the attractiveness of TEVT. The number of certificates awarded has declined or levelled off across the board. Moreover, the number of graduates at higher levels (Levels 4 and 5) is low, with only 1,500 graduates in 2009.At this rate, the 10th Malaysia Plan’s target of  achieving 50% highly-skilled workforce by 2020 and the ETP’s requirement of 1.3 million TEVT graduates will be difficult to meet, severely hampering the nation’s ambitions of becoming a high-income economy. At this rate, the 10th Malaysia Plan’s target of achieving 50% highly-skilled workforce by 2020 and the ETP’s requirement of 1.3 million TEVT graduates will be difficult to meet, severely hampering the nation’s ambitions of becoming a high-income economy.