Work in Malaysia — an uneven future?

Our responses to future possibilities will shape the contour of the changing landscape of employment


A Century ago, 70% of the working population in the Malay peninsula worked in agriculture. Now, only 12% do.

Instead, 80% of the Malaysian workforce is currently employed in services and manufacturing. A change that reflects the significant structural transformation our economy has undergone over the decades as a result of our increased integration to the changing global economy, adoption of technology, and the outcome of our policies for development.

As we move into the future, we can expect the employment landscape in Malaysia to continue to change. But this time, it will likely happen significantly faster, brought about by the rapid pace of technological progress.

How exactly? A precise forecast is impossible, but our research suggests two trends will most likely be key.

A Vanishing Middle

The first trend is job polarisation. In the past few decades, the introduction of modern labour-saving technology has contributed to this global phenomenon.

The automation of semi-skilled routine tasks has led to simultaneous employment gains in high-skill, high-wage jobs on one end and low-skill, low-wage jobs on the other, at the expense of middle-skill, middle-wage jobs.

This trend is likely to intensify in the future as artificial intelligence and robotic-enabled technologies become increasingly better, portending the potential for automating more and more complex human activities.

In Malaysia, we see the same pattern. Since 2001, the proportion of semi-skilled occupations, such as office clerks, skilled craft workers and machine operators, has declined whereas occupations on both ends of the skill-wage spectrum have seen gains.

The implication is significant. For example, sales and services is the largest semi-skilled occupation category in Malaysia with more than three million workers nationwide. In 2016, the absolute number of sales and services workers in urban areas actually declined for the first time ever.

The Rise of Independent Work

Another important trend is the rapid rise in the incidence of independent, alternative work arrangements.

That is, workers who are not engaged in traditional full-time employment. This is a world-wide phenomenon of which Malaysia is very much part of, driven in some measure by the emergence of digitally-enabled platforms centred on commercialising personal assets such as cars and rooms, and offering on-demand labour for a variety of tasks ranging from food delivery to mobile app design.

The change brought about by this trend can be very fast and disruptive. Five years ago, services like Grab and Uber were almost unknown in Malaysia. Now, there are more ride-sharing drivers in Klang Valley than there are taxi drivers.

More broadly, there has been a steady increase in the proportion of self-employed workers in urban areas since 2010. Some 1.7 million people in urban employment are now self-employed.

This proportion has increased from about 11% in 2010 to 16% in 2016, an increase of more than 760,000 people in just six years.

Learning to Learn

With the combined trends of job polarisation and the rise of independent work, two implications for the future of work are particularly salient.

First, with the rise of independent work, a greater proportion of the population would have greater flexibility and autonomy in the work they do, but could also be faced with less job security and greater volatility in income.

Secondly, and perhaps more crucially, the fast pace of progress in technology will most likely lead to more rapid cycles of obsolescence and renewal in the types of work available. A Malaysian entering the work-force now, for instance, can expect to switch jobs more frequently over the course of their lifetime as a norm.

What needs to be done to ensure that we will be ready for this? Many things are essential, including the introduction of relevant social safety nets that are aligned to this new reality.

But at the core of it, it comes down to one fundamental question: Will we be able to renew and re-skill ourselves to keep abreast with the pace of change — to complement rather than be displaced by the new technologies?

A positive answer will require a fundamental rethinking of education, centred on individuals taking the personal responsibility and having the opportunity and motivation to continuously learn and relearn.

The most important skill that all Malaysians need to have is a capacity for lifelong learning — the ability to learn throughout their lives, and not just for the first two decades.

An Uneven Future?

In facing this future of work, we must recognise two key points. First, the change will be uneven.

Even if it is better for the Malaysian economy overall, it will not be unequivocally positive for everyone.

Some employment will continue to shrink even as new jobs are created, and it is unlikely that those displaced by the changing landscape of employment will also be the ones to benefit from the new opportunities.

Policymakers need to avoid making the mistake of not acknowledging the potential hardship that will be faced by some.

This leads us to the second point. We are not passive observers of the change that is coming — just as how technology will inform what is possible for the future of work, so will our responses to these possibilities shape the contour of the changing landscape of employment.

The uneven future that we face will only be undesirable if we ourselves allow it to be so.

  • Allen Ng is a director of research at the Khazanah Research Institute.