‘TVET raises productivity of workers with only SPM and below’

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This article first appeared in The Edge Financial Daily, on November 4, 2016.


KUALA LUMPUR: Technical Vocational Education and Training (TVET) is intended for 75% of the country’s working population equipped with only the Sijil Pelajaran Malaysia (SPM) qualification and below, according to ministry of finance head of economics Dr V Sivabalasingam.

In a post-Budget 2017 dialogue presentation here yesterday, Sivabalasingam said that in order for workers to earn a higher income, it is either through academic qualification or skills training and TVET is one of the government’s attempts to increase the productivity of the 75% of the working population.

He also noted that the government had for years been spending on TVET, but it has yet to yield  the expected results.

The government has consistently allocated a substantial portion of the budget in the past few years: RM52.7 billion in 2013, RM55.6 billion in 2014, RM56.63 billion in 2015 and RM54.74 billion in 2016. The recently announced Budget 2017 will see about RM52.4 billion allocated for education.

“One of the complaints during our sessions with the industry is that these institutions are not producing what the industries want and the trainers in these institutions are not experienced,” he said, adding that Budget 2017 is an attempt to address these issues.

Asian Strategy & Leadership Institute (Asli) chief operating officer Ng Yeen Seen who moderated the dialogue also shared that almost 60% of the Employees Provident Fund contributors earn an average income of about RM2,400 per month.

With the people complaining about the rising cost of living and the low level of income, Sivabalasingam said the government wants to increase productivity.

“The government is pushing for productivity,” he said, adding that the productivity level of Malaysians stands at only around 30% and 50% of those in the US and South Korea respectively.

From an economic perspective, Sivabalasingam pointed out that given Malaysia’s low productivity and as wages are tied to productivity, if wages were to increase faster than productivity, then prices would increase.

Addressing the rising cost of living, Institute of Strategic and International Studies economics fellow Firdaos Rosli pointed out that the consumer price index (CPI) is not a precise measurement but just an index.

“Any increase in real cost is not reflected in the CPI,” said Firdaos, adding that the increase in rail fares, toll and condominium maintenance fees are also not reflected in the CPI.

He also addressed the issue of Bantuan Rakyat 1Malaysia, lauding its immediate effect of easing the financial burdens of the bottom income group but stressed the need for the government to look at a longer-term solution.

Another panellist, PricewaterhouseCoopers executive director Pauline Lum shared that the lifestyle tax relief of up to RM2,500 per year has wider coverage including printed newspaper, smartphone, gym membership, Internet subscription and others as compared with the current one. In comparison, the current tax relief includes purchase of books, journals, magazines and publication of up to RM1,000 per year, purchase of sports equipment for sports activities of up to RM300 every year and the purchase of computer of up to RM3,000 every three years.

During the dialogue, Sivabalasingam and other panellists agreed that everyone gets a bit of the pie from the announced budget. Firdaos however said that he does not think it is an election budget and that there will be one more budget before the next general election.

The Post-Budget 2017 Dialogue: Inside Budget 2017 was organised by the Asli, Centre for Public Policy Studies, Strategic Issues Forum and Corporate Malaysia Roundtable.