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News & Events

[ 29-02-2016 ]
Time to upskill SMEs
Malaysia needs to increase skilled workers from 28 of the total workforce (3.86 million) to 5.35 million or 35 by 2020. This means producing nearly 300,000 skilled workers every year. — 123rf.com

Malaysia needs to increase skilled workers from 28 of the total workforce (3.86 million) to 5.35 million or 35 by 2020. This means producing nearly 300,000 skilled workers every year. — 123rf.com

The time is nigh to upgrade the skills of workers in the SME sectors. But first, the concerned governmental agencies, trade associations and SMEs must sit down and discuss how to make training programmes relevant and attractive.

THE lack in human resources has been a long-standing problem faced by SMEs in the country. It has never been easy for SMEs to hire the right workers at affordable prices.

The lack of skilled workers is a big headache for SMEs.

Recognising the need to accelerate human capital development for achieving an advanced economy by 2020, the Malaysian Government outlined the National Agenda on Human Capital Development under the 11th Malaysia Plan, where 35% of the total labour force would comprise skilled workers by 2020.

Based on the statistics in 2015, only 28% of the total workforce or 3.86 million were skilled workers. The Government intends to increase the number of skilled workers to 5.35 million or 35% of total workforce by 2020.

In other words, the country will need to produce nearly 300,000 skilled workers every year in order to achieve this goal.

That’s a daunting task for the Government. While SMEs contribute up to 65% of total employment, most of the workers they employ are unskilled or semi-skilled. There have been several initiatives by the Government to encourage SMEs to send workers for upskilling training.

Nevertheless, the results seem to be less than satisfactory.

There are several reasons why SMEs are not keen on upskilling programmes for their workers. First of all, most of the SMEs operate with a limited number of staff. It’s not uncommon for a single worker to be tasked with several responsibilities, from administration to production. As such, when one employee goes for training, there’s usually nobody to fill the vacuum.

This mean a disruption to the normal operation of the company.

Secondly, SMEs suffer from low profit margins, so sending staff to training is viewed as something that incurs additional cost for the business, i.e. training fees and the loss of productive hours. Furthermore, training does not provide monetary returns to SMEs immediately (or in near future, for that matter).

This makes owners of SMEs unwilling to take part in training.

Thirdly, the high turnover of staff is a disincentive for SMEs to invest in training. It’s not uncommon that workers use SMEs as a stepping stone to a better-paying job with more established companies. After gaining experience and skills working with SMEs, these workers would move on to bigger companies to enhance their career prospects.

Lastly, many of the SMEs adopt low technology in production, and the machinery they use is often outdated. On the other hand, the training courses deliver knowledge and skills of advanced technology to workers. Thus there is a large gap between the acquired skills that technology workers acquire from attending training courses and the existing level of equipment used by SMEs.

Workers tend to find that their newly-acquired skills cannot be applied to existing production processes.

The Government and SMEs ought to come together and look for solutions to overcome these factors that deter SMEs from signing up for training programmes. There is much urgency for us to upskill our workforce in view of the strong competition following the implementation of the Asean Economic Community (AEC) this year and the TPPA in 2018.

Although the Government recognises the importance of building a competent and resilient SME sector, it has not allocated sufficient funding for training and up-skilling. Only a small fraction of the SMEs have benefitted from such programmes.

In the proposed new exercise of legalising four million illegal foreign workers, the Government should be able to collect fees amounting to RM8bil. This would be a good source of funding for the up-skilling of local workers for SMEs.

Government agencies such as HRDF may work with industry/trade associations and chambers of commerce to identify the training needs of SMEs, and come up with training and up-skilling programmes that fulfil the needs.

Training needs analysis can be carried out at two levels. The first would be at the industrial level, as each industry would have its own unique training requirements. It is also a good idea to identify strategic industries that should be given priority in view of the limited resources.

This can be followed by training needs analysis at firm level. This would entail looking into the needs, strengths, weaknesses and constraints of the firms, and coming out with programmes that can help them to achieve the best results in the shortest time.

With the slowdown in economy and the retrenchments that have taken place in many industries, you could not ask for a better time for SMEs to upgrade the skills of their workers. SMEs would not have to worry too much about job-hopping right now as job opportunities are few and far in between right now.