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More high-paying jobs need to be created

More high-paying jobs need to be created

05 Apr 2021

The pandemic-induced slowdown has uncovered the need for reforms to address structural issues in the job market that would also ensure quality labour market recovery.

MIDF Research economist Abdul Mui’zz Morhalim said attracting investments from domestic and foreign sources, which require high value-added production activities, will be crucial to promote the creation of high-paying jobs in the economy.

He said the promotion of greater adoption of technology and digitalisation, as well as the planned investments to enhance high-speed Internet connectivity and build 5G infrastructure as indicated in the MyDigital blueprint, will be a move in the right direction which will create job opportunities in the technology and IT services industry.

“Underemployment has been another area of concerns in the labour market. The occurrence of underemployment can be linked to mismatch in terms of education and skills.

“To a certain extent, the absence of suitable jobs has also led job seekers to opt for low-paying jobs in order to earn a living,” he told The Malaysian Reserve (TMR).

Abdul Mui’zz said this was further exacerbated by the ongoing Covid-19 pandemic, as more job seekers opt to do part-time jobs and become gig workers.

“As we are projecting a gradual recovery in the labour market, we opine that underemployment will continue as hiring in certain industries such as tourism, tour and travel, as well as consumer-related sectors, will continue to be constrained by the ongoing ban on cross-border travels,” he added.

On March 31, Bank Negara Malaysia (BNM) governor Datuk Nor Shamsiah Mohd Yunus said prevailing structural issues are weighing on future job and income prospects.

Among the structural issues highlighted is the low-cost production model which suppresses wages and productivity enhancement.

High-skilled job creation has been insufficient to keep up with the entry of fresh graduates. There have been skill mismatches between workers and industry needs.

Centre for Market Education CEO Dr Carmelo Ferlito said the structural issues are real, but these need to be addressed from a more complex perspective.

While it is true that there are sectors of the economy in Malaysia which rely on cheap and unskilled labour, he said there seems to be insufficient skilled jobs to accommodate the number of new graduates.

“It is also true that we cannot imagine an economic structure 100% made of skilled or high qualified workers. It is a mistake made in many countries, giving the idea that anybody should get a college degree.

“This has a double bad effect — increasing frustration and underemployment on one side, and lowering the degree quality on the other.”

Ferlito said the long-term key strategy is an education reform in which tertiary education is reserved for very specific very high skilled professions, while secondary education becomes professionalising.

He said this will help create middle-level workers who can bridge the gap between super qualified jobs and unskilled jobs, with the support of automation.

“We will have workers ready for the job market with operation roles who do not need a college degree, but at the same time are at a higher level than the current unskilled workers.

“They will cost more, but you will need less of them, and you will get an incentive toward automation and a process of restructuring the Malaysian production structure,” Ferlito said.

On the projections, he agrees with BNM which stated that the first quarter of 2021’s numbers will not be good, but will gradually improve if no more restrictions are imposed.

“At the same time, the situation of the hospitality and tourism industries can become very dramatic and the government needs to address domestic and international travel if we do not want an entire productive world to be completely destroyed, with bad consequences not only on current employment, but future one too.”

Meanwhile, Abdul Mui’zz said conditions in the labour market are expected to improve gradually in view of the recovering economic growth this year.

“We expect the average unemployment rate will decline to 4.3% this year (2020: 4.5%) as relaxation of restrictions on the economy, incentives provided by the government and the rollout of vaccines will boost confidence for businesses to increase labour demand.

“However, we foresee the unemployment rate will remain elevated and therefore it will take time for the recovery to bring down the jobless rate closer to the pre-pandemic levels.”

Source: The Malaysian Reserve

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