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Case study 3: Pay for training programmes only upon job placement

Tong Kooi Ong and Asia Analytica
Tong Kooi Ong and Asia Analytica • 3 min read
Case study 3: Pay for training programmes only upon job placement
Human capital is the most valuable resource of a country. However, Malaysia is not fully maximising this productive capacity.
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Human capital is the most valuable resource of a country. However, Malaysia is not fully maximising this productive capacity.

For instance, while the overall unemployment rate was relatively low at 3.4% (pre-pandemic), unemployment among the young is high — 15.4% for those in the 15-19 age group, 9.6% for those in the 20-24 age group and 3.9% for those aged 25-29. And this is an underestimation, as many unemployed are not registered.

Transition to the digital economy will displace many existing jobs, owing to increased automation and mechanisation. These displaced people will need different skill sets for newly created jobs.

Also, existing workers will increasingly be required to possess a certain degree of digital skills as businesses embrace the digital transformation. The shift to higher-value and more capital-intensive industries and a reduction in reliance on cheap foreign labour require upskilling and reskilling for Malaysians.

There are many government funded-subsidised education and training programmes. However, most are not effective and only to capitalise on government funding. According to various studies done, including by Khazanah Nasional and World Bank-Talent Corp, many graduate-trainees remain unemployed after passing out because they continue to lack the skill sets employers require — such as soft skills like communication and analytical skills, critical-creative thinking, digital skills as well as work experience. How do we change this?

Simple. The education and training curricula must be tailored to meet current and future market demand. And we ensure this by packaging training programmes such that payment is only made after the graduate successfully secures a job.

This would force training academies to work closely with all prospective employers — small and large businesses, multinational corporations as well as the public sector — on the type of jobs that are available and the skill sets required for these jobs.

Academia must actively work with the industry on internship programmes — to provide trainees with on-the-job experience — and career services for eventual job placements.

To raise the probability of successful job placements, training academies must also carry out stringent assessments on the suitability of applicant trainees at the outset — and guide them towards the best career paths based on their individual profiles.

This proposed structure will ensure that all graduates have the necessary skill sets required in an evolving job market and that they will be able to successfully secure jobs for which they are trained and can therefore, command the appropriate wages.

Putting every able and willing worker to work will raise the country’s productive capacity and potential production growth without causing unnecessary wage inflation.

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