Malaysia faces a series of complex employment paradoxes that are hindering its economic growth and workforce development. With an underemployment rate exceeding 36 percent, the country grapples with a mismatch between job needs and academic qualifications. Despite a relatively low unemployment rate of 3.2 percent, the median monthly salary remains stagnant at approximately RM2,700 (US$600). These issues are compounded by a significant number of STEM graduates working in underqualified roles and a prevailing reliance on traditional university education.
To address these challenges, the Malaysian government aims to leverage its Technical and Vocational Education and Training (TVET) programmes. The government has set an ambitious target to enroll 500,000 students in TVET programmes across 1,398 institutions nationwide this year, hoping to harness the strong potential of TVET in bridging the skills gap. Additionally, the government plans to make these programmes more accessible through a one-stop application portal and the introduction of a "skill university" with flexible schedules and no racial quotas.
Steven Sim, a prominent voice in this discourse, underscores the need for economic transformation by moving away from the "buy cheap, sell cheap" model. He advocates for measures that will raise both economic ceilings and floors, supporting enterprises with loan facilities and encouraging domestic investments.
“What I'm trying to say is this: If you are thinking the current university model will be able to fill your job market demand, then you are delusional. Because universities … (are) not created for the industrialised world,” – Steven Sim
The "wage-to-job" paradox highlights the disparity between low unemployment rates and stagnant wage growth. Sim emphasizes that for Malaysia to create higher-paying jobs, there must be a shift from low-cost strategies to value-added economic activities.
“I personally believe if you want to create higher-paying jobs and improve salaries, we have to move away from the ‘buy cheap, sell cheap’ economic model,” – Steven Sim
Moreover, societal expectations have driven university enrolment, often at the expense of TVET, which is perceived as a lesser alternative. Edwin Oh Chun Kit points out that this mindset contributes to the skills mismatch as academic programs sometimes fail to cultivate essential workplace skills.
“This is partly due to a push for university enrolment driven by societal expectations. In many ways, Malaysian society is ingrained to believe a university degree is the only route to career success, which also leads to the perceived lower status of TVET as a viable alternative,” – Edwin Oh Chun Kit
The government's Madani Economy Framework aims to tackle these structural challenges by "raising the ceiling and raising the floor." This approach involves significant financial commitments, including RM40 billion earmarked in this year’s budget to support small- and medium-sized enterprises through loan facilities. Moreover, government-linked investment companies plan to inject RM25 billion into domestic investments.
“Raising the ceiling refers to putting in more money to help the economy move up the value chain, with moves like setting aside RM40 billion in this year’s budget to support loan facilities for small- and medium-sized enterprises, and government-linked investment companies aiming for RM25 billion in domestic investments this year,” – Steven Sim
The TVET programme has demonstrated promising potential in addressing the skills-to-job paradox. Amirah Wan Usamah emphasizes that TVET graduates show high employability and potential for better pay due to courses tailored to meet specific industry demands.
“So, we can see there is quite a high potential coming from TVET graduates, both in their employability and pay,” – Amirah Wan Usamah
Ahmad Zahid Hamidi further highlights the collaboration between TVET institutions and employers, ensuring that graduates are equipped with skills directly relevant to market needs.
“The courses provided are tailored to meet employer demands, particularly from industries, and Memorandums of Agreement have been signed between TVET institutions and employers,” – Ahmad Zahid Hamidi
This strategic alignment between education and employment sectors ensures that upon course completion, TVET graduates secure immediate employment opportunities.
“This means that upon completing their courses, TVET graduates will immediately be employed by these employers,” – Ahmad Zahid Hamidi
The introduction of a progressive wage policy program represents another critical step towards addressing wage stagnation. Amirah Wan Usamah notes that while this program is voluntary, industry participation is crucial for achieving its goals of promoting wage growth and enhancing productivity.
“Malaysia’s recent introduction of the progressive wage policy program last year is a step in a positive direction in addressing structural issues surrounding stagnant wage growth, especially among more technical occupations,” – Amirah Wan Usamah
In addition to these initiatives, the government proposes advancing TVET education levels equivalent to bachelor's degrees, master's degrees, and doctorates. This move aims to elevate TVET's status and provide further opportunities for skill enhancement.
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