Why the Skilled Labour Shortage in Malaysia Needs Immediate Attention

Malaysia is recently experiencing severe shortage of skilled labour. It is putting a growing gap between what businesses in key industries can produce, hampering growth and concerns for the future competitiveness of the nation. The effects are being felt from construction sites to tech startups, everywhere in the economy. If this shortage goes unchecked, Malaysia’s productivity will be under threat and will also further increase the pressure on companies to innovate faster than ever. In this blog, we explore why the Malaysian skilled labour shortage requires immediate attention and steps that businesses can take to address this.

Understanding the Skilled Labour Shortage

What exactly is a skilled labour shortage, then? That happens when there are more jobs that need specialized skill sets than are people who are qualified to fill them. For example, in Malaysia, the shortage is most severely felt in the construction, manufacturing, IT and healthcare industries. These sectors are the economic backbone of the country, and businesses are unable to fill demand, meet project deadlines, or innovate, when there isn't enough skilled workers.

There are several causes to the shortage. The first is that there is an increasing mismatch between what workers can do and what businesses would value most in doing. When many graduates enter the workforce, they don’t have technical and vocational skills needed for today’s high demand industries. Second is the so-called 'brain drain' problem whereby well educated workers continue departing from Malaysia to find better jobs abroad. Finally, Malaysia's problem is complicated by an aging workforce as more Malaysians retire every year but fewer young and skilled workers to replace them.

Economic Impact of the Skilled Labour Shortage

The consequences of the skilled labour shortage stretch beyond just businesses—they affect Malaysia’s entire economy. With less skilled workers the productivity goes down. In the long run, companies pay more money because projects are taking longer to finish. For example, in the construction sector, delays mean cost overruns, missed deadlines are missed and strained relations with the client. Manufactures have suffered a decline to the output and revenue when production lines slow down due to a shortage of skilled machine operators.

This isn’t only a business problem, it’s an economics problem. The more industries have problems recruiting suitable extra, the less competitive Malaysia will be on the global canvas. If businesses aren’t able to operate efficiently, they might look to countries with more talent to outsource more work to, which will only make Malaysia’s economy weaker.

Challenges Faced by Malaysian Businesses

For businesses, the impact is immediate and often painful. Fewer qualified candidates apply for each position, making recruitment become a time-consuming process. As such, employers are often at a loss and scramble to fill vacancies, with less experienced staff hired or spending impossibly high amounts on training new hires. Such is also a process that slows growth, impedes innovation, and drives up operational costs.