The Malaysian economy is expected to remain relatively stable in 2020, with a GDP growth forecast of 4.8%. Despite global economic uncertainty, domestic consumption is expected to drive the economy.
The manufacturing and services sectors remain resilient, with a slight growth projected for 2020. The year will also see further transformation in these industries, with the local government investing US$131 million to encourage companies to explore and integrate automation into their processes. As several large-scale infrastructure projects look to restart in 2020, the construction and property market has similarly been earmarked for growth. However, the agricultural sector, once the backbone of Malaysia’s economy, is expected to slow down. This comes as revenue from the palm oil industry stagnates in addition to the contraction in the fishing industry. Pressures stemming from factors such as climate change and resource scarcity are also expected to take a toll on Malaysia’s agricultural sector.
Two prime industries that are expected to play a big role in Malaysia’s economy in 2020 are Islamic banking as well as technology.
Preparing the workforce for the changes ahead
To leverage the cost savings from currency exchange, MNCs prefer to hire their regional headcount from Malaysia. However, the local talent pool struggles to keep up with the high demand and expectations for skilled talent. As a result, companies eventually hire talent from overseas to meet their labour needs due to the local skills mismatch, from blue-collared workers through to specialists with niche expertise.
The government has launched the Malaysians@Work initiative with an aim to reduce this overreliance on foreign manpower by 130,000. They are also expected to continue with the re-evaluation of foreign labour and talent migration plans in 2020. Highly-skilled local talent with regional exposure, cross cultural management experience and senior leadership capabilities are highly sought-after by companies. But similar to other countries, such high in-demand talent tend to pursue opportunities abroad. The brain drain we have witnessed in the local labour market is likely to persist going into 2020.
Government and companies taking incremental steps to create a diverse workforce
With the support of local initiatives, we anticipate the female labour force participation rate to increase. The current participation rate of women in the Malaysian labour market is 55%, compared to 80% for men. There are many benefits in having a diverse and equal workforce. Several studies have already showed that it leads to higher levels of creativity and productivity, in addition to more empathetic leadership behaviour and better balanced leadership dynamics. When more women join the workforce, companies perform better financially, overall wages increase and the economy improves.
Companies with contingent workforce can gain better efficiencies
As more companies face ambiguity about the future due to the poor economic outlook, more employers will turn to contracting as a key workforce strategy. In addition, organisations that are undergoing restructuring efforts will look to professional contractors to fill short-term manpower needs. A contingent workforce helps companies maintain talent flexibility and lower manpower costs, and allows them to remain agile to better adjust to market changes.
More companies also find it productive to explore talent management and development strategies through a more flexible workforce. They are able to build a future-ready workforce without their employees being confined to fixed functions and traditional career progression paths.