LETTERS: Solely based on the recent 2021 Budget, the following five points are the most important reflections concerning the labour market:
Equilibrium between health and economic risks. In safeguarding the welfare and livelihood of the people, the Budget provides a clear policy priority in establishing the equilibrium point between Covid-19 infection and economic risks.
Stimulus aid packages to boost economic recovery and growth are designed without ignoring the importance of strengthening the public health system.
The "equilibrium" indicator of the Budget is to improve socio-economic welfare of the rakyat by lowering health and economic risks.
Elevation of job creation as a national agenda. The outbreak of Covid-19 elevates job creation as a national agenda, putting aside the existing structural issues in the labour market, such as under-employment, wage differentials and mismatch.
During the crisis period, short-term policy measures are more important to safeguard the people's welfare and livelihood.
Moving through the economic revitalisation stage in the Budget, targeted incentives, such as Skim Jaminan Penjanaan Pekerjaan and PenjanaKerjaya, and the establishment of the National Employment Council, are designed to support this short-term agenda.
Human capital investment for skills development. The 2021 Budget emphasises this aspect, which is reflected through the allocation for various trainings, reskilling and upskilling programmes.
For training, focus is primarily given to developing entrepreneurs and preparing fresh graduates to penetrate the labour market.
Reskilling and upskilling programmes are structured to help employees prepare for the transition process from one industry to another and to improve their skills level, thus increasing workforce flexibility and agility in the ever-changing labour market conditions.
A skills-needs approach for automation. Technological upgrading of economic sectors through digitalisation, automation and modernisation receives considerable attention.
Concerns about changing technologies fostering technological unemployment and the substitution of machines for labour have featured prominently in all industrial revolutions.
Two measures need to be emphasised.First, identifying the "automatability risk" — the propensity of workers with high risk of substitutability by machines, robots or other algorithmic processes, and its impact on labour market outcomes.
Second, determining the skills needed to support the types of automations.Indirect measures affecting the labour market. This indirect effect of numerous incentives and initiatives have to be taken into consideration for policy analysis.
For example, the promotion of high-value services/activities by relaxing several conditions (i.e. number of high value jobs, number of key positions and annual operating expenditure) are proposed to qualify for a renewal of the Principal Hub incentive for another five years.
This is likely to influence the size of skilled workforce in large-sized firms. In addition to that, the Budget also proposes to increase value-added activities in free industrial zones and licensed manufacturing warehouses from 10 to 40 per cent.
This initiative will increase local content in total production and, at the same time, directly and indirectly increase labour requirementsOverall, the 2021 Budget embodies two foundations — recovery of current employment and growth of the future workforce.
Recovery measures for current employment are oriented towards retaining the employments and releasing the economic burden.
Extension of the Wage Subsidy programme and Job Search Allowance, and direct financial assistance to farmers and fishermen are among the examples of these measures.
Meanwhile, growth of future employment is focused on the investment of human capital through reskilling and upskilling, and specific training programmes to create future jobs for employees and entrepreneurs.
Associate Professor Dr Mohd Yusof Saari
Chief EconomistEIS-UPMCS Centre for Future Labour Market Studies (EU-ERA), The Social Security Organisation
The views expressed in this article are the author's own and do not necessarily reflect those of the New Straits Times