Labour market is a key issue for many developing as well as developed countries. Whether the people are skilled or unskilled is determining factor for the inflow of foreign direct investment (FDIs) to many developing nations. So, Malaysia depended on its abundant supply of literate and trainable labour force to attract investments in the export-oriented electronics industry since the early 70s’. This labour force has gone through skilled upgrading and enhancement in the past three decades and today, Malaysia can boast of having a pool of relatively skilled and professional labour force that is capable of handling and developing state-of-the-art technologies.
Despite these accomplishments, human labour which was and remains the key factor in driving Malaysia’s economic growth. In charting the growth path for the first decade of the 21st century, Malaysia decided to engage in global information economy. As the Ex-Prime Minister Tun Datuk Dr. Mahathir Mohamad emphasised (Malaysia 2001a), “…, the force of globalization, liberalization and information and communications technology have fundamentally changed the rules and nature of global trade, resource flows and competition.
Obviously, the world is changing, the new event happen will affect labour market, and Government continue to face many challenges. In this paper researchers will examines the challenges of the global economy lie ahead of Malaysian labour market. And researchers know that the countries that are able to face to the challenges will grow in success, while those failing to do so will decrease the speed of development.
2.1 Structure of Labour Force in Malaysia
Since 1970, Malaysia has seen many changes. There have been reductions in poverty levels, improved health conditions and significant gains in per capita income. The Gross National Product per capita in 1998 prices increased 223% from RM2,414 in 1970 to RM7,794 in 1998 (Malaysia, 2003). The unemployment rate which in 1970 was 8.1% declined to 3.5% in 2004. This successful growth path has been achieved with the context of the need to achieve national unity and reduce poverty (Economic Report, 2004/2005). The direction of policies has been regularly redefined as required, from economic growth with social reengineering has succeed in bringing about gains for the Bumiputra community especially in reducing in identification of ethnicity with occupations (Nagaraj and Lee, 2003). The policy has worked, in large part due to expansion of opportunities for education, even though the Bumiputra population has increased faster than that the other ethnic groups between 1970 and 2005.
Economic growth has been accompanied by rising living standards, greater urbanization and access to health and education, and an improvement in the distribution of income, ameliorating the twin problems of poverty and racial imbalances. The performance has been particularly remarkable after 1987 when the economy achieved above 7% growth in seven consecutive years reaching virtual full employment by 1995. With this background Malaysia now aspires to become a fully developed economy by 2020 (Athukorala and Menon, 1996). In the 1970s, the primary source of wealth for economy has thus seen diversification from agriculture and mining to include manufacturing and services today. Employment is expected to grow at an average rate of 1.9% per annum, contributing 1.1 million jobs during the Ninth Malaysia Plan period, particularly those requiring tertiary education. The economy is expected to maintain full employment with the unemployment rate at 3.5% in 2010 (Ninth Malaysia Plan, 2006).
The structural changes observed in the economy are reflected in the changes in the labour force (Nagaraj and Lee, 2003). There has been a shift as well to occupations requiring greater education levels. In 1970, 49% of the workforce comprised agricultural workers, 33% clerical, sales, and...