Stiff competition, unstable economic condition remain challenges for employers

Khazanah Research Institute’s report says 53% of public sector enterprises are expecting their workforce to grow


Malaysian employers have indicated that the stiff competition and unstable economic condition continue to be among the challenges for businesses to grow, apart from high taxation and restrictive regulation.

According to Khazanah Research Institute’s (KRI) report titled “The School-to-Work Transition of Young Malaysians”, poor economic condition has been the common concern by the businesses from the large, medium and small establishments.

“High taxation and restrictive business regulations are also one of the concerning issues, especially for the large and medium enterprises.

“Unfavourable currency exchange rates appear to be more of a concern to medium enterprises, but surprisingly, not to the large enterprises,” it said in the report.

However, the study, which surveyed 23,785 Malaysian respondents from all levels of youth and employers, revealed that employers perceived issues directly under the purview of local authorities — such as unsatisfactory public utilities and Internet services or harassment — as not serious.

“The lack of credit or funding does not appear to be a serious concern, even for the micro-enterprises.

“Also, the lack of access to new technology is not rated as a serious problem, although this could be a cause for a concern since it could indicate that enterprises are not focusing on upgrading to the new technology,” it said.

The report added that Malaysia, which is deemed as an “adopter” country by the technology community, is lagging behind nations such as South Korea, Japan and Singapore.

Bank Negara Malaysia, which adopts the World Bank’s Digital Adoption Index (DAI) that classifies countries as “front-runners”, “adopters” and “laggards”, has emphasised that although Malaysia is an “adopter” country, it lags behind notable front-runners.

“The DAI report stressed that for Malaysia to become a front-runner, digital adoption must be improved as the small and medium-sized enterprises (SMEs) are still based mainly on the brick-and-mortar business,” it said.

It noted almost half of the employer respondents opined that high labour cost is not a concerning matter, while almost 20% of the respondents considered labour cost as not relevant.

“Even half of all large employers have rated high labour cost to be ‘not serious’.

“The issue of labour costs does raise at least one related question — if labour costs are not a serious concern, why are employers complaining that workers, especially young workers, are ‘asking for too much’?” the report questioned.

For young employers, the study indicated that the group identified poor economic conditions and competition to be a threat to the businesses.

“Very interestingly, young employers consider the lack of both skilled and unskilled workers, and high labour costs to be much more serious issues than overall employers,” it said.

The report added that young employers considered all other listed issues in the survey as more serious problems, suggesting that the group is facing greater difficulties in succeeding their businesses.

As for large enterprises, the report said the businesses are more likely to increase workforce, an extension to their hiring exercise for the past two years.

The bulk of enterprises reported no changes in the size of their labour force over the past two years.

According to the study, micro-enterprises were most likely to report no change, whereas two-thirds of the large enterprises reported they had increased the number of workers.

“By type of enterprise, the most obvious changes were by public-listed companies, which reported an increase in their workforce,” it said.

Going forward, the survey reported that large enterprises and SMEs are optimistic to increase their number of workers as the public-listed companies are expected to continue their workforce expansion.

“What is surprising is that 53% of public sector enterprises are expecting their workforce to grow, as the report had also noted that Malaysia has one of the highest percentages of public servants in the world.

“Given the concerns about government operating costs and expenses, we would not expect this to be an employment growth sector,” it added.