Enterprise Surveys Enterprise Note Series Gender Women Workers in Malaysia’s Private Sector 2017 Mohammad Amin and Amanda Zarka T his note analyzes various issues related to women workers in Malaysia’s formal private sector. Using the World Bank’s Enterprise Surveys (ES) data, the proportion of women among all workers in Malaysia is on par with other upper middle income group economies but less than the regional average. In Malaysia, the number of women among all workers varies with the firm’s size, sector, management characteristics and whether or not training is provided to workers by the firm. Firms in Malaysia seem to lag behind firms in other countries in terms of how friendly some of the labor laws are to women workers. Suitable reforms of these laws can Enterprise Note No. 35 potentially increase women’s employment in Malaysia’s formal private sector. Introduction distribution by firm-size (small, medium and large), Over the past quarter century, women have joined the sector (manufacturing, retail and other services) and labor market in increasing numbers. According to the export orientation of firms. To put things in perspective, World Bank (2011), between 1980 and 2009 the global Malaysia’s experience is benchmarked against the average rate of female labor force participation rose from 50.2 for the following comparator groups: other countries percent to 51.8 percent, while the male rate fell from in the East Asia & Pacific (EAP) region,3 upper middle 82 percent to 77.7 percent. Consequently, the gender income countries and lower middle income countries.4 gap in the labor force participation rate narrowed from Unless stated otherwise, all figures and discussion below 32 percentage points in 1980 to 26 percentage points refer to the private sector covered by the ES. in 2009. This is encouraging for overall economic development and growth as women constitute about half of the world’s population. Women’s involvement in the The proportion of women workers in labor market contributes to GDP directly and potentially Malaysia is on par with upper middle indirectly through better education and health outcomes income countries for children.1 About 35 percent of all workers in Malaysia are women. Despite the upward trend in the women’s labor market This is on par with upper middle income countries and participation rate, various concerns remain. For instance, World Bank Group higher than lower middle income countries, but lower in some regions such as the Middle East and North Africa than the regional average (figure 1A). In Cambodia, and South Asia, the participation rate among women is Thailand, and Lao PDR, women comprise close to half as low as 22 percent and 29 percent, respectively. Further relative to men, women tend to be disproportionately of all workers. Malaysia (at 35%) outperforms only two concentrated in low-paying and vulnerable jobs in countries in the region—Vietnam and Philippines where agriculture and the informal sector while their presence in women equal 28 percent and 32 percent of all workers, high-paying jobs in the formal (registered) private sector respectively. A roughly similar picture emerges for the is limited (see, for example, World Bank 2011, Elson proportion of women workers on a per-firm basis (figure 1999, Beneria 2003). 1B). Overall, women comprise a substantial portion of This note focuses on women workers in Malaysia’s Malaysia’s private sector employment that is on par with formal private sector (henceforth, private sector). Using the rates experienced by other upper middle income the ES data,2 we analyze the overall level of women’s economies. However, the regional experience suggests that presence in Malaysia’s private sector as well as their a higher presence in Malaysia is within reach. Figure 1 The proportion of women workers in Malaysia’s private sector is comparable to other upper middle income economies 1A 1B 39% 40% 40 40 35% 36% 34% 34% Percentage of all workers in a typical Percentage of all workers in the private sector that are women 30% private firm that are women 30 30 26% 20 20 10 10 0 0 Malaysia EAP Upper Lower Malaysia EAP Upper Lower middle income middle income middle income middle income Source: Enterprise Surveys. Consistent with total (men plus women) manufacturing relative to the comparators, especially the employment, most female workers in upper middle income countries. Consequently, the share Malaysia are employed in large firms of women workers in the other services sector is much For all workers (men plus women) about 64 percent smaller in Malaysia than in any of the comparator groups. are employed in large firms, 16 percent in medium firms For the retail sector, the share of women workers in and 20 percent in small firms in Malaysia.5 For women Malaysia is roughly same as in the EAP region, somewhat workers alone, the distribution is the same. Thus, while lower than in the lower middle income group and much close to two-thirds of all female workers are employed in lower than in upper middle income group countries. large firms, there does not seem to be any gender specific The large share of women workers employed in the bias in employment by firm-size. The comparator groups manufacturing sector in Malaysia is mostly due to the reveal a similar picture (figure 2A). large size of the manufacturing sector. However, there Lack of gender specific bias is also evident when looking is a slight gender specific bias towards female workers at the firm-level average. That is, the proportion of workers employed in the manufacturing sector. That is, the that are women is roughly same for a typical small (34%), manufacturing sector provides jobs to about 58 percent of medium (35%) and large firm (35%) in Malaysia. A all workers (men plus women) and 61 percent of women similar pattern is observed for women workers among workers alone. Similarly, the other services sector provides all workers employed collectively in small, medium and 30 percent of all jobs in the private sector compared with large firms in Malaysia. These results are not unique to a somewhat lower 26 percent of all women’s jobs. For the Malaysia but are also found in the comparator countries as retail sector, the opposite result holds with 14 percent of well. For instance, in the upper middle income countries, women workers and 12 percent of all workers in Malaysia. about 36 percent of all workers in small firms are women. To summarize, women who work in Malaysia tend to The corresponding figures for medium and large firms are work in manufacturing jobs more so than their male roughly similar (35% and 36%, respectively). counterparts. The opposite holds for the other services sector. This pattern of gender specific bias is also observed in Relative to men’s employment, women’s the comparator groups at the sector level. In fact, the employment shows a slight bias towards bias is more pronounced in the case of the EAP region manufacturing compared to Malaysia. In Malaysia, the manufacturing sector provides the bulk A somewhat different picture emerges when looking at of jobs to all women (61%), followed by a much smaller the firm-level as opposed to the aggregate sector level. For a share for other services and the retail sectors (figure 2B). typical firm, the percentage of women workers is highest in Malaysia stands out for its high share of women’s jobs in the retail sector (44%) followed by manufacturing (34%) 2 Figure 2 Most women workers in Malaysia are employed in large firms and in the manufacturing sector 2A 2B 100 100 26% Percentage of all woman workers 34% Percentage of all women workers 32% 36% 80 80 14% 64% 62% 50% 48% 13% 60 60 25% 17% 40 40 16% 19% 30% 31% 61% 55% 44% 47% 20 20 20% 19% 21% 23% 0 0 Malaysia EAP Upper Lower Malaysia EAP Upper Lower middle income middle income middle income middle income ■ Small ■ Medium ■ Large ■ Manufacturing ■ Retail ■ Other services Source: Enterprise Surveys. and then the other services sector (27%). Comparator Non-exporting firms in Malaysia are as likely countries also have a higher share of women workers to hire women workers as exporting firms for a typical retail firm. However, in the case of the EAP Several studies highlight the impact of globalization or region, the difference between retail and other services and exporting activity on women’s employment. Potentially, this manufacturing sectors is minimal. Malaysia also stands impact occurs through various channels.7 First, exporting out for the low share of women workers in a typical other markets are highly competitive making discrimination services firm (27%) in comparison to the EAP region against female workers costlier for the employer. Second, (39%) and the upper middle income countries (32%). modern technology often used by exporting firms tends to favor brains over brawn. This may improve women’s job Women in top management positions in prospects since they tend to enjoy a comparative advantage Malaysia tend to open doors for women relative to men where “brawn" is less valued. Third, employees at lower positions Studies have shown that women often face Women’s presence in the work force Figure 3 discrimination in the labor markets from prospective is higher in firms with a female top employers. One possibility here is that having a woman in manager a top management position may increase the women’s job 60 market prospects. The ES data show that having a female Percentage of workers that are women 50% 48% 50 top manager is indeed associated with a higher proportion 45% 44% of women workers in the firm (figure 3). A roughly similar (firm-level average) 40 35% picture emerges in the comparator countries. 33% 30% One possibility is that of spurious correlation between 30 25% women top managers and women employees. For instance, both women top managers and women employees may 20 gravitate towards the same type of firm in terms of sector, 10 size (small, medium, large), age of the firm, exporting activity, location within the country. While we are able to 0 Malaysia EAP Upper Lower rule out these factors from spuriously driving the results,6 middle income middle income a more rigorous analysis is required to ascertain (or reject) ■ Top manager is female ■ Top manager is male the positive causal impact of women top managers on women employees. Source: Enterprise Surveys 3 exporting industries in developing countries often tend A significantly higher proportion of women to be labor intensive where women are disproportionately workers is found in firms that offer training represented. However, these arguments are not without their caveats. In the richer countries, exporting industries Training provided by firms to workers can be particularly may be the high-tech industries or skill intensive attractive to women for various reasons.8 For instance, industries that are disproportionately represented by men. women often lag men in technical education. Absence In this case, exporting activity may not benefit but rather from the labor market due to child bearing and child harm women’s job prospects. Further, even if employer rearing tends to hinder acquisition of skills and experience discrimination against women decreases, social attitudes by women. At least to some extent, these problems can be towards women’s work may remain unchanged, hindering overcome by training provided by firms. In Malaysia, the their participation in the labor market. percentage of firms that provide training to their workers The ES data suggest that globalization or exporting is only 18 percent compared with 23 percent in the EAP activity has little impact on women’s employment in region, 37 percent in upper middle income countries and Malaysia. That is, a typical exporting firm in Malaysia, 34 percent in lower middle income countries. Interestingly, defined as one that exports (directly or indirectly) at least in Malaysia, training by firms is strongly associated with a 10 percent of its annual output, has about 35 percent of higher presence of women workers. That is, the percentage its workers who are women compared with almost the of women workers in a firm equals 39 percent for firms that same (34%) for the remaining firms. The result is similar provide training compared with a much lower 33 percent in the upper middle income economies. However, for the in firms that do not provide training. This difference in the EAP region and lower middle income group, exporting proportion of women workers is unique to Malaysia as no firms tend to hire proportionately more women than the such difference is found in any of the comparator groups non-exporting firms. As indicated above, one possibility (figure 4). The data confirm that the result for Malaysia is here is that the positive effects of exporting on women’s not spuriously driven by differences across firms in size, employment may be restricted to countries that have sector, location (within Malaysia), age of the firm, and relatively low levels of income. A more rigorous analysis is extent of exporting activity. needed to verify the claim. Figure 4 In Malaysia, the proportion of Are women workers concentrated in low women workers is higher in firms that provide training to their productivity and less dynamic firms? employees As mentioned above, despite increases in women’s employment around the globe, there is a lingering 40 39% 39% 39% 37% 36% concern that women are disproportionately concentrated Percentage of workers that are women 33% in vulnerable and low-paying jobs. Part of this concern 29% 28% 30 is due to the large presence of women in the informal (firm-level average) sector including home based work that typically pays less than formal sector work. However, there is substantial 20 variation in firm productivity even within the formal private sector covered by the ES. Are women in Malaysia’s 10 formal private sector more likely to be employed in firms with low productivity relative to men? The ES data suggest that the answer is no. This holds even after accounting for 0 Malaysia EAP Upper Lower differences across firms in their size, age, exporting status, middle income middle income gender of the top manager, sector of activity and location ■ Firm provides training ■ Firm provides no training within Malaysia. Further, the ES data show no tendency in Malaysia that women relative to men are concentrated Source: Enterprise Surveys in firms that are less (or more) dynamic as measured by the firm’s annual sales and employment growth rate. Of course, it’s still possible that within the same firm, women may be involved in low-paying and stagnant occupations more than men. Future research can help shed light on the issue. 4 Malaysia lags other countries in laws that Figure 5 Malaysia lags other countries in laws are gender-neutral or favorable to women’s that support women’s employment employment Women’s participation in the labor market depends on 100 Percentage of laws that are gender neutral various social, institutional and economic factors. One or favorable towards woman workers 82% such factor is the set of laws that govern the employment 80 74% of women.9 Focusing on laws related to women’s access 64% 65% to employment opportunity as compiled by the World 60 Bank’s Women, Business and the Law (World Bank 2015) 45% 46% 39% confirms that Malaysia’s performance is below that of the 40 comparator economies. The ranking is based on responses to questions about legal restrictions to getting a job. 20 17% A “yes” answer to the question indicates that the law is gender-neutral or favorable towards women (coded as 1) 0 Malaysia EAP Upper Lower while “no” indicates otherwise (coded as 0). These laws are middle income middle income divided into two groups. Group 1 (workplace protections) ■ Group 1 Laws ■ Group 2 Laws consists of the following 6 laws or questions: Does the law mandate nondiscrimination based on gender in hiring? Is it prohibited for prospective employers to ask about Source: Women, Business and the Law (WBL 2015). Note: Group 1 includes 6 laws while Group 2 includes 11 laws as family status? Is dismissal of pregnant workers prohibited? discussed in detail in the text above. Are mothers guaranteed an equivalent position after maternity leave? Are employers required to provide break-time for nursing mothers? Are parents entitled to Conclusion flexible/part-time schedules? Group 2 (working hours and industry restrictions) includes 11 laws or questions This note analyzes various issues related to women’s on whether nonpregnant and nonnursing women can do employment in Malaysia’s formal private sector. Malaysia’s the following: work the same night hours as men; do the performance in terms of the proportion of women among same jobs as men; work in jobs deemed hazardous in the all workers is on par with the upper middle income same way as men; work in jobs deemed morally or socially countries but behind that of other countries in the region. inappropriate in the same way as men; work in jobs deemed Most women workers in Malaysia are employed by large arduous in the same way as men; work in mining in the firms and in the manufacturing sector. The proportion of same way as men; work in factories in the same way as women workers at the firm is higher if the firm provides men; work in construction in the same way as men; work training and has a female top manager than is otherwise in the same occupations other than mining, construction the case. Lastly, Malaysia may be able to further increase and factory work as men; work in metalworking in the women’s employment through appropriate reforms of same way as men; engage in jobs requiring lifting weights some labor laws that may be adversely affecting women’s above a threshold in the same way as men. We use values job opportunities. for 2016 for these laws. Malaysia’s performance measured by the proportion of Notes laws in Group 1 and Group 2 above that are gender-neutral 1. See for example, Klasen and Lamanna (2009), Morrison et al. or favorable towards women is below the average for the (2007), Duflo (2003), Tzannatos (1999). EAP countries as well as the upper middle income group; 2. Enterprise Surveys are designed to be representative of the non- agricultural and non-financial formal (registered) private sector it is below the average for lower middle income group for of the economy. Note that the survey does not cover firms with Group 1 and at par for Group 2 (figure 5). As figure 5 less than 5 employees or those in the informal sector. The surveys shows, the gap between Malaysia and the comparators is are stratified by firm-size (small, medium and large), sector, and particularly glaring for Group 1. Thus, there is potential location within the region. The surveys follow a common sampling for Malaysia to further improve women’s participation as methodology and a common questionnaire, allowing for cross- country comparability. More information on the surveys and the employees in the formal private sector by reforming laws raw data can be obtained from www.enterprisesurveys.org. that may hinder such participation. 5 3. The EAP region comprises the 6 large economies in the region for References which data are available. These are Cambodia, Indonesia, Lao PDR, Amin, M., and A. Islam. 2015. “Does Mandating Nondiscrimination Philippines, Thailand and Vietnam. in Hiring Practices Influence Women's Employment? Evidence 4. The upper middle income and lower middle income classification Using Firm-Level Data.” Feminist Economics 21(4): 28-60. follows the World Bank, excluding Malaysia and countries already Amin, M., A. Islam and K. Kushnir. 2017. “Uncovering the Relationship included in the EAP comparator group. There are 45 countries in between Women’s Employment and Trade Orientation Using Firm- the lower middle income group and 41 in the upper middle income level Data.” Mimeograph. group. Due care is taken to ensure that the results discussed for Beneria, L. 2003. “Global/Local Connections: Employment Patterns, the various comparator groups are not unduly affected by outlier Gender, and Informalization,” Chapter 4 in Gender, Development countries. and Globalization: Economics as if All People Mattered. New York: 5. Firm-size is defined by the number of permanent full-time Routledge. equivalent workers as follows: small (5-19 employees), medium Duflo, Esther. 2003. “Grandmothers and Granddaughters: Old Age (20-99 employees) and large (100 or more employees). Pension and Intra-Household Allocation in South Africa.” World 6. This is done via regression analysis. Bank Economic Review 17(1): 1-25. 7. See Amin, Islam and Kushnir (2017) and the literature cited Elson, D. 1999. “Labor Markets as Gendered Institutions: Equality, therein. Efficiency and Empowerment Issues.” World Development 27(3): 8. See for example, Rowley (2013), Ragins and Sundstrom (1989). 611-627. 9. See for example, Amin and Islam (2015), Neumark and Stock Klasen, Stephan, and Francesca Lamanna. 2009. “The Impact of Gender (2001). Inequality in Education and Employment on Economic Growth: New Evidence for A Panel of Countries.” Feminist Economics 15(3): 91-132. Morrison, Andrew, Dhushyanth Raju and Nishtha Sinha. 2007. “Gender Equality, Poverty and Economic Growth.” Working Paper 4349, World Bank, USA. Neumark, D., and W.A. Stock. 2001. “The Effects of Race and Sex Discrimination Laws.” NBER Working Paper No. 8215. Ragins, B. R., and E. Sundstrom. 1989. “Gender and Power in Organisations.” Psychological Bulletin 105: 51-88. Rowley, Chris. 2013. “What Might Influence Female Manager Careers Success?” Mimeograph, Cass Business School, City University London. Tzannatos, Zafiris. 1999. “Women and Labor Market Changes in the Global Economy.” World Development 27(3): 551-70. World Bank. 2011. “Gender Equality and Development.” World Development Report 2012. World Bank: Washington DC. World Bank. 2015. Women, Business and the Law 2016: Getting to Equal. World Bank: Washington DC. The Enterprise Note Series presents short research reports to encourage the exchange of ideas on business environment issues. The notes present evidence on the relationship between government policies and the ability of businesses to create wealth. The notes carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this note are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent. 6