MALAYSIA should focus on the international benchmarking of its education and workforce quality to fulfil the human capital goals outlined in the Madani Economy framework.
Commenting on Malaysia's consistent underperformance in benchmarking tests, such as the Programme for International Student Assessment (PISA) that measures the scholastic performance of 15-year-olds, Malaysian Rating Corporation Bhd (MARC) said a commitment towards raising education and productivity outcomes was important to signal policy consistency, sustainably improve Malaysia's gross domestic product (GDP) per capita and showcase its ability to materialise development blueprints.
"Despite high spending on public education at 20.4 per cent of total government expenditure over the last five years compared to the global average of 13.4 per cent, learning outcomes have remained subpar," it said in the statement.
It added that while disrupted learning during the Covid-19 pandemic led to a drop in PISA scores worldwide, Malaysia's decline of 27 points across all literacy measures surpassed the average decline of 10 points in other countries.
"This is significant as a 20-point decline is equivalent to one full year of learning," said MARC.
The Human Capital Index 2020 report also revealed that Malaysian students lagged by almost three years in learning outcomes against the expected 12.5 years of schooling.
According to the statement, a major reason that the labour productivity growth rate has yet to reach the momentum to achieve the 11th and 12th Malaysia Plan (11MP; 12MP) target of 3.6 to 3.7 per cent per annum, is that only 29.6 per cent of Malaysia's current workforce is engaged in high-skilled jobs.
This is also below the 12MP target of 35 per cent.
"Apart from wage issues, the country's modest labour productivity growth rate could also be related to insufficient employment opportunities and labour market mismatches.
"If not addressed, this would stifle economic and industry development, thereby suppressing wealth and wages, risking further brain drain and curbing brain gain," it added.
Bank Muamalat Malaysia Bhd chief economist Mohd Afzanizam Abdul Rashid said there was a need to relook at the country's education system or syllabus, in particular critical subjects such as Mathematics and Science, especially among primary school students.
"I think the Covid-19 pandemic in 2020 and 2021 has created a negative shock not only to the economy but the trajectory of student learning experience.
"Perhaps, some students may have been left behind. If such a situation is not rectified, it may accentuate the weak productivity growth in the next decade or so."
Malaysia's labour productivity growth rose a marginal 1.3 per cent on average per annum over the last five years while wages grew at a faster 2.4 per cent per annum over the same period.
Meanwhile, the average skills-related underemployment as a percentage of the population increased to 5.6 per cent, which can partly be explained by graduates not meeting industry standards.
Malaysian Institute of Economic Research economist Dr Shankaran Nambiar said it would be misleading to make a comparison between Malaysia's expenditure and figures that were based on the global average.
"I do not think Malaysia should cut its expenditure on public education. What we want to see are better outcomes.
"If we had better quality human capital, we would be able to move up the value chain and be in a position to attract more sophisticated industries."
The Madani Economy framework anchors the government's commitment to human capital development with measurable goals, including positioning Malaysia in the top 12 of the Global Competitiveness Index (2023: 27th) and top 25 of the Human Development Index (2021: 62nd) within the next decade.