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Malaysia - Meeting labor needs : more workers and better skills (English)

Malaysia is unique among developing countries in that in a relatively short period from 1987 to 1993, the labor market has changed dramatically and the perennial preoccupation with unemployment has given way to problems of serious labor shortages. The Government's policy stance toward the labor market needs to adjust to this successful transition of the economy. To remain attractive in an intensely competitive region, the Government must shift its traditional focus from job creation to the more complex initiatives aimed at relieving labor market tightness though immigration, greater female participation in the labor force and upgrading the quality of labor. The objective of this report is to assist the Government in strengthening these initiatives by identifying bottlenecks in the labor market and suggesting remedies in light of international experience. The report outlines that the policy choices to maintain internationally competitive labor costs are: 1) devalue the exchange rate; 2) import foreign workers to alleviate labor market tightness; and 3) increase labor productivity. A comprehensive strategy to upgrade the labor force would have four prongs: 1) improving secondary and higher education to raise the general technical competency of the work force and increasing the "trainability" of workers; 2) controlling the escalation of non-wage costs of labor (employee provident fund contributions and other payroll levies, fringe benefits, bonuses, overtime, and other rewards) and firms for productivity improvements; 3) augmenting the labor force by tapping more female labor, facilitating workers' move from agriculture to manufacturing and developing a transparent and consistent immigration policy; and 4) strengthening institutions and policies to encourage firms to invest in worker training programs. The report concludes that Malaysia's successful transition to an industrialized society crucially depends on how well the labor needs are met. More workers as well as more skills will be needed to maintain the growth momentum. In the public sector, better trained civil servants will be needed to regulate the activities of the much enlarged private sector. The government is gearing up to meet this challenge by reforming the formal education system, particularly at the higher level.


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    Pre-2003 Economic or Sector Report

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    East Asia and Pacific,

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    Malaysia - Meeting labor needs : more workers and better skills

  • Keywords

    secondary vocational school;scheme will;Manufacturing;Labor Market;mother and child health care;female labor force participation rates;labor market need;total factor productivity growth;public training institution;cost of labor;maternal and child health;Public and Private Institution;categories of worker;unit labor costs;gender wage gap;number of migrant workers;employment of foreign workers;paper and paper products;skill upgrading;unskilled worker;manufacturing labor force;income inequality;labor market tightness;open door policy;payroll levy;immigrant worker;plantation sector;total labor force;ethnic income inequality;average real wage;total fertility rate;formal education system;child bearing age;small family size;decline in fertility;years of schooling;higher value added;participation of woman;labor market strategy;labor force growth;number of workers;Immigration policy;metal product;electrical machinery;quality higher education;labor market changes;private training institute;public training provider;private training institution;long term growth;creating employment opportunity;private sector job;cost of immigration;labor market issue;gdp growth rate;labor market experience;role of migration;public training program;private sector involvement;inequality in wage;foreign direct investment;loss of skill;exchange rate movement;private sector wage;exchange rate depreciation;movement of migrant;full time workers;total wage bill;opportunity for woman;inequality in income;primarily due;difference in wages;modern sector;wage growth;rubber products;work force;fringe benefit;skill composition;Gender Inequality;transport equipment;gender inequalities;domestic labor;high wage;labor shortage;employment opportunities;wage employment;female workers;skill shortage;professional worker;skill category;



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Malaysia - Meeting labor needs : more workers and better skills (English). Washington, D.C. : World Bank Group.