Employment trends shaping the labour market in Malaysia

July 28, 2020

Employment trends shaping the labour market in Malaysia


For businesses considering expansion internationally, Malaysia is an attractive option. It was ranked 12th by the World Bank in their Ease of Doing Business Report. Reforms and initiatives implemented by the Malaysian government have consistently improved their ranking over the past few years.

But what is the shape of the local employment market in Malaysia? And what impact has COVID-19 had on the national labour force?


The Malaysian economy and the impact of COVID-19

The Malaysian employment market has been stable in recent years. Economic activity and employment rates have steadily expanded, thanks to high levels of labour productivity and skills attainment.

In fact, Malaysia was ranked 11th globally for the ease of finding skilled employees in the WEF’s Global Competitiveness Report

A decade of 4.8% average growth in gross domestic product (GDP) has been fueled by strategic sectors in

  • IT
  • Energy
  • Petrochemicals
  • Manufacturing
  • Construction
  • Telecommunications

However, the end of 2019 marked the entrance of COVID-19 into everyday language. COVID-19, or the novel Coronavirus, has sent many nations hurtling into economic crisis. While the reach of the virus began slowly, it did not take long until economists braced for the worst.

At first, the effects seemed harmless as people took the precaution of social distancing, wearing facemasks and rigorous handwashing. But as infection numbers escalated, the Malaysian government took decisive action and implemented the movement control order, or MCO.

The disruption caused by COVID-19, saw Department of Statistics unemployment figures surge to 3.9%, their highest in a decade

So, here is what we have learned and can expect to arise out of the job market during and post COVID-19.


Short and Long-Term Labour Trends

The government stimulus package helped keep SMEs and local MNCs afloat. But, while thousands of jobs were saved, many were not so lucky.

Come early April, the number of unemployed due to COVID-19 increased sharply. Construction and oil & gas were particularly affected, as they had to suspend operations indefinitely. By mid-April, the unemployment rate climbed to 5%, the highest since the 1990s.

Thousands of companies were forced to let go of their people and even close down business. Even technology companies developing software and apps were not immune. Some have closed temporarily while others are permanently shuttered.

Thanks to May’s Conditional MCO (CMCO), the hiring process slowly began to improve, albeit tentatively. Many were still confined to their homes as engineering and construction jobs were still in suspended animation.

The real recovery in recruitment began in June as the Recovery MCO (RMCO) enabled the reopening of the private sector.


Which sectors of the employment market are seeing growth?

There are some markets that pivoted and made the best of the situation. E-commerce and healthcare have sprung to the rescue since many could not travel outside of their homes except for essentials.

Logistics companies, most notably food deliverers, spiked in the tens of thousands to match supply and demand. Many took up the mantle of deliveryman as a temporary or side income gig. Stories emerged of senior management, engineers and tech entrepreneurs signing up to Food Panda or Grab Foods.

Even public sector jobs were not immune. Many workers in administration, human resources, health and safety were absolved of their duties in order to stay at home. There was, however, an underreported increase of people joining the medical and NGOs and offering support in COVID hotspots.

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Flexible working and the remote business model

For introverts, working from home sounds ideal, but for many, the truth can be somewhat different.

The reality of remote work can be stressful, particularly during the crisis of a pandemic. Distractions caused by childcare commitments, isolation and intense workloads can make concentration difficult.

However, remote jobs are still key to the labour market recovery, even as the RMCO is being executed. Digital marketing, coders, writers, finance, and software developers are increasing in demand as their roles can be done remotely.

But technology isn’t the only discipline benefiting from remote working innovation. Project managers and engineers can still work remotely. Companies like Telekom Malaysia and TNB (Tenaga Nasional Berhad) kept their engineers up and running -especially for emergencies. The impact of digitalisation and artificial intelligence could also transform traditional industries like oil & gas at a faster rate than before.

We are also seeing an increase in demand for Employer of Record solutions. An EOR helps companies to increase their footprint globally and hire in other countries without an established entity. This enables companies to access the abundance of talent available to work remotely from Malaysia.


Which occupations are growing in demand?

Alongside demand for delivery drivers, warehouse workers and health professionals, we are also seeing an increase in niche role requirements.

robot

Robotic Engineers

The pandemic has highlighted the value of innovation in maintaining safety levels. Robotics has been increasingly critical in essential industries such as manufacturing, medical institutions and even emergency services.

software

Software Developers

As technology advances to enhance and ease our way of life, newer and better software will be needed. Demand for programmers with expertise in PHP, C++, C#, Python and Java continues to rise. This trend will increase as development skills are needed in multiple industries, and required languages are changing regularly.

solar

Solar Photovoltaic (PV) Installers

COVID-19 has increased the conversation around a green energy transition. Solar panels could be the new oil fields for power and PV Installers could be the next drillers.

And to hire for this role, people don’t need a high-end degree. Under the Employment Act of 1955, a candidate with an SPM certificate and a complete training course is all you need. And for many companies, such training is provided.

data-1

Information Security Analyst

Thanks to COVID and the restrictions on industries in need of physical manpower, the software infrastructure has been growing exponentially. Cyber security will be the new frontline post COVID-19, with analysts and penetration testers increasing in demand

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Offshore Engineers and Project Managers

Malaysia is still dependent on oil so offshore engineers will always be needed on the high seas. As industries like aviation, shipping and construction recover, oil demand will revive. Experienced technicians and engineers will be in demand again, especially local talent.


What should businesses consider before expanding to Malaysia?

As the world evolves rapidly with new technologies, it is talent that will ensure businesses stay innovative.  Employee skill sets, capacity for learning and culture fit are catalysts to growth. But the ability to detect that within any candidate is not an easy feat.

You need to understand labour trends, employment regulations and the availability of skilled talent. You must understand its people, their culture and their working ethics. Hence, for many companies expanding to Malaysia have two choices: start from scratch or outsource.

Starting from scratch requires establishing an entity and building your HR from the ground up. But this is time consuming and costly initially. Outsourcing is a more scalable and faster alternative.

Global Employment Outsourcing firms act as a strategic partner to foreign companies expanding internationally. They can provide outsourced HR to help you establish operations and outperform your competitors. Sometimes, you cannot afford to wait to establish boots on the ground and need expert advice immediately.

This post was written by: Nic Taylor, Country Manager - Malaysia & Thailand