Topic 1: Sufficient

earnings?
GROUP 3

TAN ZHAO HUA (PBS20201178) - Group Leader

NITHYA RAJENDRAN (PBS19101046)

HEERASHINI JOTHI (PBS19301208)

LIM KIM FUU (PBS19101015)

58% 52%
- increase mobility of Malaysian workers
- same position being offered but Singapore pays at least twice as much as
the Malaysian employers
- high exchange rate of the Singapore dollar versus the Ringgit
 01
Discuss, validate and
provide examples why,
how and what are the
factors that have led to
this situation.
1. Low Spending in R&D
1.44%

1.04%

0.64%

2006 2016 2018

 1. Low Spending in R&D
❏ Causes slower pace of technological advancement
❏ Vulnerable to technological shifts
❏ Production in Malaysia is less competitive
- eventually make less profit which further leads to lower worker wages
❏ Example: South Korea
- In 2018, Malaysia spend 1.04% of GDP in R&D while Korea spend 4.81% of GDP on
R&D which is the second highest countries spend the most on R&D.
- South Korea has devoted extra attention to technology development and
innovation to promote growth.
- Few successful technology company such as Samsung, Hyundai or LG
 2. Slower Pace of Human Capital
Development
❏ Importance of human capital development
- Enhance the productivity of the organization as well as to steer the economic growth
❏ Impact of not putting adequate attention to the development of employees
- Cannot master the technologies required
- Cause insufficient high-wage job creation, weak firm profitability
- Industries are excessively dependent on semi- and low-skilled workers and thus
causes the wage growth is slow.
❏ Most employers in Malaysia want to hire workers who are already skilled and do not
need training
- They view training as a cost instead of investment
- Fear that the benefits of investing in training are lost when employees leave and take
their newly developed skills to another employer
❏ According to World Economic Forum (2020)
- The pace and scale of disruption brought forth by IR 4.0 would require more than
one billion people in the world to be reskilled by 2030
- By 2022, some 42% of the core skills required to perform existing jobs are expected
to change.
❏ According to survey by recruitment and human resources services company
Randstad Malaysia
- Aware that they needed to upskill to take advantage of the opportunities that came
with digitization.
- 93% said they were willing to acquire these skills themselves to guarantee their
employability.
- Only 63% said their employers offered such a benefit
 3. High Numbers of Cheap
Foreign Workers
❏ Foreign workers in Malaysia
- At the end of last November, there were about 1.38 million legal foreign workers
- Concentrated in manufacturing, construction and agriculture sectors
- Doing the 3D (dirty, dangerous and difficult) work
❏ Employers in Malaysia
- Highly dependence on the low-skilled foreign worker that can work for long working
hours with low salary as this is what Malaysian cannot accept
❏ Employees in Malaysia
- Less bargaining power when it comes to their own wages
- Therefore, employers will rely on labour-intensive, low-cost business models which
lead to a suppression of local market wages and encourage the creation of low-skilled
jobs.
 02
What possible affirmative
actions can be taken by
the employers, employees,
government, industry and
academia to achieve a
win-win outcome. Explain
and justify.
 What possible affirmative actions can be taken by the employers,
Q2 employees, government, industry and academia to achieve a win-win
outcome. Explain and justify.

Employee and employer affirmative actions

● Produce proactive and productive workers

The employer has to have a good understanding on how each employee’s skill affects work
performance to develop effective development programs.

Employee training can help to improve comprehension by filling in the skills that are missing.

This also will help the business to reach a smooth operation and save cost.
Employee and employer affirmative actions
● Forge an appropriate wage-setting mechanism

Conduct a market search

Ensure that the wages paid to their employees are comparable to similar positions in the
marketplace

The employer should take note of the range of pay in the salary surveys and other information
that is relevant in establishing average wages

Create job grades and grouping of positions with similar worth

Employee and employer affirmative actions
● (GLC)’s can start to adopt the concept of living wage

This approach will require the employers to have extensive consultations and engagements

with the stakeholders.

The existing firms also can be urged to expand and upgrade while new firms and start-ups

emerge to create more high-paying jobs as per the geographical factor.

Employee and employer affirmative actions
● Improve CE-GDP ratio should be improved

A higher share of the profit generated by their employers moving forward.

The employers should consider giving a higher share of the profit generated by the business.

The compensation of employees to gross domestic product ratio, CE-GDP ratio should be

improved by the employers.

Employee and employer affirmative actions
● Reduce the reliance on foreign workers

Situation has caused the skilled job wages to be depressed by insufficient high-wage job creation, weak firm

profitability and labor market slacks.

The lower wage situation can be improved by decreasing hire of foreign labors and creating better positions for the

locals.

Employers have to adopt global best practices in labor managements.

This approach can be taken with adoption of artificial intelligence and Internet of Things which would also reduce

overseas remittances by foreign workers.

Moving towards high-technology and high-skilled labor will lift the value of ringgit, reducing the outflow of

remittance.
Government
● Continues reviewing of the incremental of minimum wages
- Set up a minimum wages to industrials
- To review so that it matches with current standard of living

● Monetary Implication
- Target the market and provide support
- Plan and policy to reduce the financial expenses
Industry

● Creating Jobs and allowing more job intake

- Explore the business and open up new job and employment opportunities
to allow those without jobs to have financial support
- Create space for self growth and independence among the nation and
reduces the amount of jobless people around
Academia

● Reduce or Eliminate Tuition Fees

- Provide financial assistance to those who can not afford to pay fees
- Target the low income family and kids who needs support and provide support
- Education helps in building more values and improve the lifestyle and well being
of future generations.
03
If you are the HR
Manager, what are 2
possible proposals you
can make to your bosses
to help correct this
imbalance. Defend your
proposals.
1st proposal

- Wage setting mechanism that bencmarked against the

productivity of the employees
- Given higher share of profit generated by the employers
- Would be fair to both the employees and employers
- Can be evaluated through KPI
2nd proposal

- View the incentives in a different way

- Don't necessarily look at base pay. Higher pay doesn't mean
happiness
- Look at other thing such as incentives, bonuses, career
development and promotions
 Conclusion

Do you think Malaysia can reach high income status?