ONE of the primary challenges faced by employers these days is the rising costs of raw materials, energy and salaries.
As such, micro, small and medium enterprises (MSMEs) are rendered vulnerable particularly to the removal of the diesel subsidy, increased Sales and Service Tax (SST) and wage increases resulting from the persistent labour shortages.
All these are aggravated further by additional pressure from higher compliance costs associated with the new e-invoicing mandate and adherence to Environmental, Social, and Governance requirements, said Malaysian Employers Federation (MEF) president Datuk Syed Hussain Syed Husman.
He further noted that local authorities and government agencies are also increasing related fees, adding that these concerns were highlighted in the latest survey by the Small and Medium Enterprises Association.
“All sectors of the economy face experience staff shortages especially for positions that are not able to attract local employees,” he told FocusM.
“The ageing workforce, combined with rapid technological advancements and rising demand in sectors such as technology and renewable energy, is creating a growing skills gap. This shortage leads to delayed projects, increased costs, and higher wage increases.”
Furthermore, it will stifle economic growth and drive companies to outsource or offshore critical science and technology tasks, potentially leading to domestic job losses and the relocation of supply chains away from Malaysia, Syed Hussain explained.
Shortages in the workforce
Citing a January 2024 survey by the Japan External Trade Organisation involving around 300 Japanese companies in Malaysia, he disclosed that both manufacturing and retail sectors are experiencing talent shortages.
In fact, over 60% of companies in Selangor, Johor and Kuala Lumpur have reported shortages in the workforce, affecting both large corporations and MSMEs alike.
“Businesses are turning to automation due to the complexity of production technology (78.2%), rising labour costs (73.3%), and worker shortages (51.5%),” Syed Husain revealed.
“The survey also found nearly 60% of companies cited ‘difficulty securing human resources capable of handling automation technology’ as a significant challenge to automation, with Malaysia ranking highest in this regard.”
The MEF president went on to note that Malaysia’s Critical Occupation List had consistently highlighted jobs in engineering and ICT as difficult to fill, thus underscoring the ongoing struggle to recruit highly-skilled workers.
Citing a January 2024 report by PwC’s 27th Annual Global CEO Survey (Malaysia), he revealed that in the survey 70% of CEOs in Malaysia believe their workforce lacks necessary skills, and 64% pointed to a gap in technological capabilities.
“As Malaysia’s economy becomes more digitized, the workforce must adapt quickly to these changes. Immediate collaboration among educational institutions, industries, and the government is essential to address the widening skills gap,” he said.
He pointed out that at university level, a March 2024 report by the Khazanah Research Institute emphasissed the disconnect between the specialisations chosen by students in higher education and the actual needs of businesses.
He added that while industries require engineers, chemists, and technicians, most graduates hold degrees in fields like business, law, and social sciences.
“Bridging this gap will require stronger partnerships between universities and industries to better align curricula with market demands,” he reckoned.
“Additionally, upskilling programmes for graduates who struggle to find jobs matching their qualifications will be vital in closing the skills gap.” – Sept 20, 2024
