The modern workforce has been reaping the benefits of generative AI, automation, and other IR 4.0 capabilities in recent years. This digital shift has significantly improved workforce productivity and given organisations the flexibility to focus on their innovation efforts. That said, while technology has brought about positive changes to the workplace ecosystem, it still has its fair share of workforce challenges.
In a recent publication by the New Straits Times, startling statistics showed that half a million (or specifically, 565,756) SPM candidates chose not to pursue tertiary education.
This revelation isn’t just a number; it’s a stark indicator of a deeper shift in the aspirations and priorities of Malaysian youths. This can exacerbate prolonged workforce challenges and cause Malaysian employers to lose out on potential growth fostered by a highly skilled workforce.
This trend is not isolated. Further concerning statistics highlight the gravity of the situation. Youth unemployment (those aged between 15 and 24) is significantly higher than other age groups due to a lack of job readiness or skills mismatch.
A lack of formal qualifications and low educational attainment are major contributors to the 10.3% (299,700 people).
This trend of SPM leavers opting out of tertiary education, coupled with high youth unemployment rates and perceived educational inadequacies, sets the stage for a series of long-term workforce challenges that Malaysia must address urgently. Let’s delve into four critical areas:
#1 Brain drain
When a large segment of the younger generation chooses not to pursue higher education, the pool of highly skilled and specialised talent shrinks. This scarcity can lead to a “brain drain”, where talented individuals seek opportunities abroad, whether it be due to attractive salaries or better job prospects.
The statistics are alarming, with Malaysian HR Minister V Sivakumar stating that the brain drain rate in Malaysia stands at 5.5%, surpassing the global average of 3.3%. The brain drain phenomenon can have a significant impact on Malaysia’s economy, as it hinders economic growth and development.
#2 Limited IR 4.0 skills
The Fourth Industrial Revolution (IR 4.0) demands a workforce equipped with advanced digital skills, including data analytics, artificial intelligence, and cybersecurity. Without tertiary education, many young people may lack the foundational knowledge and specialised training required to excel in these fields.
According to the UOB Business Outlook Study done in 2024, 40% of Malaysian employers who were surveyed in this study said that there’s a lack of digital skills among their employees. 43% of employers are in the works to upskill or reskill their talents so they can keep up with digitalisation and thrive in an AI-driven job market.
#3 Automation and Technological Disruption
As automation and AI become increasingly prevalent, many traditional jobs are at risk of being replaced. Without the necessary skills and adaptability, a large segment of the workforce could face unemployment or underemployment.
In the Asia-Pacific region, up to 90 million jobs could be displaced due to AI. This technological disruption highlights the importance of continuous learning and upskilling, and openness to adapting these skills is required by an entire workforce to keep up with an ever-evolving business landscape.
#4 Low productivity
A workforce lacking in advanced skills and adaptability is likely to experience lower productivity levels. This can impact economic growth, reduce competitiveness, and hinder Malaysia’s progress towards becoming a high-income nation.
Not only that, but a less skilled workforce may struggle to innovate and adapt to changing market demands, which can cause organisations loss of opportunities and profit generation.
Bridging the skills gap starts now to prevent greater workforce challenges
In the age of IR 4.0, organisations, governments, and educational institutions collaborate to create an agile workforce that can thrive in an AI-driven job market. This includes investing in the tools and technology to foster a culture of innovation and continuous learning.
Stay tuned for our next article where we explore four practical ways that people development solution providers implement to address modern-day workforce challenges. The future of Malaysia’s workforce depends on our ability to adapt and innovate, ensuring that everyone has the opportunity to reach their full potential.
