This article first appeared in The Edge Malaysia Weekly on July 25, 2022 - July 31, 2022

THE shortage of skilled labour in Malaysia, exacerbated by the acceleration of technological transformation during the pandemic, is hampering business recovery as industries scramble to meet pent-up demand and new supply chain obligations.

Industries are relying more than ever on technical and vocational education and training (TVET) graduates as their skills are required across various industries to support operations requiring automation and technological transformation.

“There is great demand among the electrical and electronics, food and beverage, chemicals and chemical products, fabricated metal, and rubber products industries due to the nature of their products and processes. Some sub-sectors are also seeing a spike in demand for new products that require an increase in capacity, and expansion plans,” Federation of Malaysian Manufacturers (FMM) president Tan Sri Soh Thian Lai tells The Edge.

“Furthermore, the country’s aspiration to move towards a more knowledge-based, high-technology and high-value-added economy has added to the demand for more skilled labour.”

Business groups lament that the pandemic exacerbated the shortage as some of the foreign workers that the industry trained have been sent home, while locals have found opportunities in the gig economy or transitioned to other industries during the various lockdowns without looking back.

According to Small and Medium Enterprises Association of Malaysia (Samenta) chairman Datuk William Ng, Penang alone is short of 50,000 engineers to support the semiconductor boom, while local skilled workers are being poached by manufacturers in neighbouring countries.

“For smaller businesses, being generally less automated than larger factories that have more advanced automation in place, having ‘human hands’ on the ground is crucial. For this reason, multinationals outsource more labour-intensive work to SMEs,” he points out.

“We want to help our members to quickly automate and digitalise, but this goes beyond technological efforts. It requires mindset and process changes, which take time. [This is how] the labour shortage is hampering our ability to take advantage of the surge in demand. Many of our [members’] orders are now [snapped up] by neighbours such as Vietnam and Indonesia.”

Samenta estimates that SMEs are short of between one million and 1.5 million workers. “If you multiply that with productivity per employee, that translates to between RM90 billion and RM135 billion in production loss,” says Ng.

AT&S Malaysia, an Austria-headquartered maker of high-end printed circuit boards (PCBs) and integrated circuit (IC) substrates, is caught in a bind as the dearth of skilled manpower could hamper its expansion plans. Although the firm needs TVET as well as other talents in various functions such as finance, logistics and warehousing, operations and human resources, being an engineering and technology-driven company, it views TVET talent as critical to its success.

“We currently have a workforce of 500 but need 6,000 workers by 2024, of which 30% to 40% will comprise technical staff or employees with a good understanding of technical skills,” says its head of human resources Sharifah Salmah Syed Harun, noting that talents in their mid-career with three to eight years of experience tend to be the most sought-after in the electrical and electronics sector.

Like many other employees who have tasted the flexibility of hybrid work arrangements during the pandemic, TVET workers want the same luxury of having flexible working hours with attractive compensation and benefits, says Sharifah.

“The talent movement has indirectly caused a dynamic job market shift where companies are willing to offer higher-than-average salaries to quickly fix the immediate talent requirement. The two years of slower recruitment in the local job market may add on to the ‘Great Resignation’ sentiment among the local talents as well,” she observes.

Even as AT&S joins forward-looking organisations in positioning itself as “a cool company that has the potential to double its revenue in the next three to four years with its cutting-edge technology” as part of its global AT&S Employer Branding Campaign to recruit quality candidates, payoffs from the effort may be subject to the lofty demands of today’s exacting generation of employees.

“To the younger generation, inclusivity, environmental welfare and social conscience are far more important than they were to previous generations. In addition, our survey shows pay as a top consideration for employees when considering a change of their work environment,” says Kartina Abdul Latif, people and organisation tax services leader at PwC Malaysia.

“Bear in mind that prospective younger employees are unlikely to view the manufacturing industry as attractive. Companies must work together with industry bodies to improve the sector’s image, so that manufacturing jobs are more attractive to women and young talent.”

It helps to understand that TVET delivery in Malaysia is fragmented as it is offered by both public and private institutions — via seven government ministries and 17 agencies — subjecting candidates to duplication in the programmes offered and inconsistent engagements between TVET institutions and industry players, says Kartina.

A more robust and effective governance system is much needed to consolidate the different curriculums provided by the various TVET institutions and unify standards for the accreditation of TVET programmes, which should result in an updated national accreditation that ensures quality candidates are able to meet industry needs, earn a decent wage and create their own jobs, she stresses.

Despite a RM6.6 billion allocation under Budget 2022, and RM6 billion the year before, to empower the TVET sector, the general stigma associated with technical work as a credible career continues to dampen efforts for its push.

“TVET is perceived as a second-class education reserved for academically weak individuals. Government support is therefore needed to raise awareness of the benefits of TVET by showing not only the high percentage of employment opportunities available, but also what type of jobs they can obtain and how to develop their skills and careers,” says Kartina.

Samenta’s Ng concurs, saying that poor perception of the industry is discouraging to the limited number of Malaysians willing to work in an environment maligned as dirty, dangerous and demeaning, curtailing efforts to increase the TVET pool of talents.

“Then, there is the general perception that SMEs are not paying enough for local workers. That’s not true. Some SMEs are paying between RM4,000 and RM5,000 for fresh engineering graduates. But these graduates either prefer to work for MNCs or are demanding preferred work conditions,” he adds.

“Industry players have tried training school-leavers for jobs in factories, but the turnover is very high. And at times, we spend more time and money on training than on the people who are actually working.”

FMM’s Soh stresses that addressing the issue of skilled-labour shortage should be a multi-pronged approach. He believes collaborative initiatives between institutions and industries should garner the interest of youths in TVET and science, technology, engineering and mathematics (STEM) education, enhance the employability of students as well as reskill the existing workforce so that the workers are not displaced when companies embark on automation and technology adoption.

“As Malaysia may not have any or an adequate supply of certain skill sets, there must be support for industries to bring in such specialists from overseas with the right talents as well as immigration facilitation to allow the positions to be filled by foreign technical experts,” Soh stresses, explaining that within sub-sectors lie companies with a higher reliance on unskilled foreign workers for certain processes, as well as industries requiring “very niche skills”, necessitating the dependence on foreign manpower.

Within organisations, employers can continue to offer opportunities for inter-company transfer programmes. AT&S Malaysia managing director Vittorio Villari points out that this is an oft-overlooked means of dealing with talent shortage.

“Not only does this provide easy access to a pool of candidates with a good understanding of the company and its values and processes, it also creates multiple benefits for the employees concerned. Currently, we plan to transfer some experienced employees from our Chongqing, China, arm to our plant in Kulim as well as other areas within our firm,” he explains.

PERSOLKELLY Malaysia’s latest Workforce Insights Report titled “Building Agility With a Contingent Workforce” highlights the fact that more organisations are now looking at contingent workforces to meet their business needs, including short-term and fixed-term contractual employees, freelancers or independent contractors, and outsourcing to agencies.

Its managing director and country head Brian Sim suggests that organisations leverage the current trend and adapt their workforce model to attract the skilled talent pool while working on retaining existing employees.

PwC’s Workforce Hopes and Fears Survey 2022 may offer a glimpse into a worker’s psyche and standpoint as heads of industry figure out how best to boost recruitment and retention of skilled workers. The survey, which shows 32% of participating employees as being concerned about their role being replaced in the next three years, and 54% worried about their limited capacity to learn new technical or digital skills needed for career advancement, may be telling of organisations’ efforts to develop their workforces.

“It’s this training that must be addressed, in order for investments in upskilling to pay off in an impactful way. Hence, any upskilling programme should be tailored to fit the needs of the business, not just from the standpoint of the employee’s technical skills but also how the skills can complement machines,” says Kartina.

“Other aspects of retention initiatives such as improving workplace flexibility, providing better health benefits and providing more opportunities for talent mobility are also critical points of consideration for TVET talents.”

Finally, a change in perception may be what it takes to bring the winds of change to the industry.

“There is nothing wrong with students going into the vocational stream from secondary school onwards. Yet, there is the prevailing mindset that only dropouts and the academically weak do so. That must change,” says Samenta’s Ng.

“Industries always prefer technically skilled hires. The government is doing what it can to promote vocational schools, and the industry is fully supporting that.”

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