The big picture on skilled labour market

WILL the global downturn and fragile economies of the United States and UK prompt Malaysian talents to return, or attract talents from the West? RAM Rating Services Bhd looks at the situation in terms of two main cohorts. Chief economist Dr Yeah Kim Leng explains: “We have the fresh graduates with no experience and the experienced workers. If the job market is sluggish in industrialised countries, it would be more difficult for lower skilled Malaysians to obtain employment as there may be more competition for these vacancies. “We would expect the more experienced and skilled cohort to have some leverage compared to the inexperienced graduates. Thus, it may prompt a return of this group. However, some may decide to further their studies and stay on in these countries, to ride out the sluggish employment situation and/or better their job prospects.”

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Yeah says the report reiterates a long-standing observation that we not only have not optimised the country's human resources to achieve faster growth, but that its rich human capital base has been eroded by a pick-up in talent outflow.

“Additionally, the brain drain not only has not been offset by an equivalent intake but we are also experiencing a decline in skilled expatriate population, thereby exacerbating the country's already narrow skill base.” Yeah was commenting on The World Bank's Malaysia Economic Monitor: Brain Drain. He says the comprehensive analysis of Malaysia's brain drain situation lends credence to the importance of the New Economic Model's (NEM) policy and strategic initiatives.

But besides targeted measures such as the setting up of Talent Corp, the recently announced 15% tax rate and other incentives, it reaffirms the need for a comprehensive solution to address the underlying causes such as misaligned economic incentives and social disincentives as highlighted in the NEM. “While measures and incentive could tip the decisions in Malaysia's favour, as mentioned in the World Bank report, they are complementary to the need to address productivity and inclusiveness challenges. Addressing the fundamental issues of productivity and inclusiveness will help to mitigate the negative effects of brain drain while accentuating the positive spillovers from the Malaysian diaspora,” he says.