What Labour Shortage

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There is no labour shortage in Malaysia. Total underemployment is about 2.4 million made up of skilled related and time related underemployment. Added to that there are 642,000 unemployed. That is three million Malaysians available for work.
The Labour Force Participation Rate (LFPR) is only 69% so 7.3 million people are not in the workforce, including 840,000 graduates. That is 10 million Malaysians including highly educated graduates.
There is also no skills shortage. In fact, there are around 1.8 million people in skills related underemployment. This means their skills are higher than their job requires. So there is an overwhelming oversupply of skills and a corresponding under-supply of high skilled jobs.
Nonetheless, many companies claim they have trouble recruiting workers not just in low-skilled work or services such as retail and hospitality but also in high-skilled work and services such as banking and finance. Why is that?
The reasons are well known and include poor salaries, bad terms and conditions of employment, poor career opportunities, long hours, checking in and checking out to monitor your time, and poor physical workspaces.
The biggest problem is bad management, old-style hierarchical systems, inflexible working hours, poor work-life balance and uninteresting work options below available skill levels.
For many, the poor work environment and low pay makes it better for them to stay out of work or even to go freelance. This is how the market works, people have choices and often the work offer is very poor so they choose not to take it and they are right to do that.
Ultimately, this is a failure of management and leadership, not a failure of potential employees. Our graduates are ready for the labour market, the graduate LFPR is above 85% but the jobs on offer are just really poor.
So now the question on the lips of every Malaysian: What should the government do?
The short answer is nothing, first because government policy is demonstrably failing, and second because the market has a better solution.
The government raised the minimum wage but many employers are resisting it. Even contract workers in the public sector are not receiving the upgrade.
Amendments to the Employment Act, which themselves were piecemeal and half-witted, have been postponed to next year, showing them to be wholly ineffective.
Seeking a remedy in the courts for unfair labour practices is at best slow with unpredictable outcomes, or worse, slow and predictably in favour of employers.
In the face of these failures of policy and law, people vote with their feet. They don’t need the “powers that be” to tell them that their job is terrible. They also have no reason to expect the “powers that be” will care, let alone have the ideas to help them.
So market forces prevail. When employers offer bad, low-paying jobs on poor terms and conditions people simply don’t accept them. If they already have a job and the terms change against them then they can stop working temporarily, just as we saw with delivery riders recently.
This market pressure must continue for employers to change their ways and improve their job offers according to market conditions.
As long as the reserve army of foreign workers remains unavailable, Malaysian workers have more leverage in the labour market and there is greater chance of a better working environment for many people.
Withholding our labour, either by not participating in the workforce or by indicative industrial action, is the right of every free person in a free market and a free society. It may not have been effective in the past but it may be more effective now. - FMT
The views expressed are those of the writer and do not necessarily reflect those of MMKtT.

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