MY Say: Uneven development and transformation, Vision 2020 and beyond

This article first appeared in Forum, The Edge Malaysia Weekly, on November 23, 2020 - November 29, 2020.
Agriculture’s share of employment declined from 31% in 1982 to 10% in 2019 but remained important in most rural areas. (Photo by Abdul Ghani Ismail/The Edge )

Agriculture’s share of employment declined from 31% in 1982 to 10% in 2019 but remained important in most rural areas. (Photo by Abdul Ghani Ismail/The Edge )

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Work in an Evolving Malaysia — by Hawati Hamid, Siti Aiysyah Tumin and Nur Thuraya Sazali — is the second Khazanah Research Institute (KRI) report in a month to revisit the period associated with Vision 2020, announced in early 1991, after the era typically associated with the New Economic Policy (NEP) of 1971 to 1990.

Vision 2020 sought to create a psychologically liberated, mature, ethical, tolerant, liberal, democratic, scientific, industrialised, prosperous, progressive, caring, economically just and united Malaysian nation.

Arguably, Vision 2020 was killed by the 1997/98 Asian financial crisis followed by the Mahathir-Anwar political fallout and the 2008 global financial crisis. Two decades before, the NEP was introduced to create the conditions for national unity after the traumatic racial riots of May 1969 by eradicating poverty and restructuring society to eliminate the association of race with economic function.

It is a pity that the country has not had a fuller debate over what happened to this progressive national vision, which sought to go beyond the ethnically divisive dominant interpretation and implementation of the NEP, repudiating its intent to forge national unity.

Capturing public policy, ruling party politicians and their business partners ensured the NEP undermined such prospects by invoking ethno-populist victimhood to secure “ketuanan Melayu” privilege.

Curiously, former prime minister Tun Dr Mahathir Mohamad hardly referred to the Vision 2020 that he launched during his recent political comeback, although many consider it to have been his finest moment, rising — albeit briefly — above the divisive legacy of NEP implementation, privatisation and the mid-1980s’ split in Umno.

It is no secret that Vision 2020’s modernist unifying vision was first drafted by three now-departed Malay intellectuals at the Institute of Strategic and International Studies (ISIS), namely its director-general Noordin Sopiee, fiscal economist Ismail Salleh and political sociologist Rustam Sani.

Rustam — son of progressive nationalist politician Ahmad Boestamam, who helped draft the 1947 PUTERA-AMCJA People’s Constitution (Perlembagaan Rakyat), which envisaged a bangsa Melayu (Malay nation defined by patriotism and not ethnic genealogy or religion and long concerned with nation-building) — was key to envisaging Vision 2020’s bangsa Malaysia (Malaysian nation).

Sadly, the main reference to Vision 2020 often made in Malaysia these days is to Datuk Seri Najib Razak’s caricatured equation of developing the nation with achieving high-income country (HIC) status, a World Bank category. Najib’s regime claimed that Malaysia was on the cusp of HIC status by statistically ignoring foreign labour, especially the undocumented foreign workers.

This remains a major problem, inter alia, in Malaysian economic statistics as we pretend they do not contribute significantly to economic output despite being poorly treated. For example, discriminating against them adversely affects Malaysian workers working in similar jobs and puts the Malaysian public at risk by refusing to test them for Covid-19 as if the virus discriminates on the basis of citizenship.

Official data acknowledge over 32 million citizens and over 15 million in the labour force, including 2.2 million non-citizens. Half a decade ago, the then human resources minister announced that an estimated 6.7 million foreign workers in the country used data from telcos. In other words, about 4.5 million were undocumented, and hence not recognised as part of the labour force.

This implies that about a third of the labour force in Malaysia of closer to 20 million is foreign and of whom two-thirds were not acknowledged. By ignoring their contribution and measuring productivity and income without them, we only delude ourselves that we have nearly achieved high-income status despite lacklustre investment and development for well over two decades.

Uneven structural change and employment

With such caveats in mind, we can learn a great deal from the KRI report’s review of Malaysia’s labour trends from 1989 to 2019, almost coinciding with the period since Vision 2020 was proclaimed. Work influences incomes, consumption and well-being, covered in last month’s report, especially as labour incomes accounted for more than four-fifths of household income in 2019.

Household incomes are linked to spatially varying employment conditions in the country. Using available official data, it offers a spatial perspective, reviewing workforce characteristics in different states to identify some challenges and opportunities.

Such uneven economic development resulted in varied employment conditions. More economically advanced states had higher labour force participation rates (especially for women), more skilled and educated workers as well as lower unemployment rates. Hence, better paid jobs were mainly in the central hub of Selangor, Kuala Lumpur and Putrajaya.

But differences in work conditions persist. Formal and secure employment is widespread, but vulnerable and precarious jobs are growing. In the more economically advanced states, almost four-fifths of workers had more secure employment terms. But decent work deficits have been increasing, even in richer states.

Transformations

As Malaysia’s economy has grown, the distribution of economic activities among states has evolved. Agriculture’s share of employment declined from 31% in 1982 to 10% in 2019 but remained important in most rural areas and, relatively more significantly, in the poorer north and east coast states of Peninsular Malaysia, Sabah and Sarawak.

Thus, agriculture still accounted for 24% to 26% of employment in Sabah, Sarawak and the federal territory of Labuan, and 14% in the other poor Peninsular Malaysia states in 2019 (highest in Pahang at 21%). Decent work deficits — for example, in occupational health and safety and non-standard jobs lacking formal social protection — are strongly associated with agriculture.

Manufacturing employment shares grew in all states in the decade before the 1997/98 Asian financial crisis, with the national share peaking at 24% in 2000 before falling to 18% in 2019. West coast states in Peninsular Malaysia have industrialised more. More export-oriented high-technology manufacturing, with more skilled workers, is also concentrated in the advanced states.

Penang and Johor still have higher shares, at 37% and 25% respectively. Manufacturing accounted for 21% of employment in Selangor-Kuala Lumpur-Putrajaya in 1982, declining slightly by 2019 despite its huge population increase and high concentration of modern services. Meanwhile, the 2019 manufacturing employment shares were only 7% in Sabah and Sarawak and 12% in the other poorer states.

Traditional services growing most

Employment in services continued to grow faster than in other sectors throughout the country, especially between 1999 and 2019, amid lacklustre growth in other economic activities. With 63% of national employment in 2019, its job share in Sabah and Sarawak also rose from 30% in 2009 to 37% in 2019.

While the sector has provided many jobs, traditional services — including wholesale and retail, food and beverage and accommodation — have grown more, offering lower pay and more irregular employment compared with modern services such as finance, information and communication, and professional services.

Between 2009 and 2019, traditional services rose from 35% to 40% for all jobs as the job share of modern services shrank from 8.0% to 6.8%. Modern services, typically involving more skills and better pay, were more common, with 15% in more urbanised Selangor-Kuala Lumpur-Putrajaya, which is more than triple the average elsewhere.

Meanwhile, employment in social services like education, health and public administration contracted from 17.2% in 2009 to 15.8% in 2019. Such services not only improve social well-being but also employ more skilled workers, providing stable jobs and better pay.

Jobs, gender, skills, pay

The more economically advanced states have seen increasingly higher labour force participation rates (LFPR). In Selangor-Kuala Lumpur-Putrajaya, close to three quarters of the working age population (15 to 64 years old) were in paid employment, while other states had rates below 70%.

Women’s participation drives the overall LFPR, rising from 45% in 1982 to 56% in 2019. Women’s LFPR rose fastest in Selangor-Kuala Lumpur-Putrajaya from half to over two-thirds while other states grew less, from 45% to 51%. Flexible work arrangements, support for care work and other policies enabling women’s participation could further raise women’s LFPR.

Over the past two decades, the share of skilled employees has risen faster in these states, as low-skilled employees became more significant elsewhere while semi-skilled jobs’ share declined everywhere. Of semi-skilled jobs, services and sales workers grew most in recent years, but with low wage growth.

Between 2011 and 2019, such workers grew from 20% to 23% of total employment, without stemming the overall decline of semi-skilled jobs, with sluggish wage growth (3.4% annually), relatively lower wages (RM2,060) and great risk of job displacement by automation.

Jobs needing more education and skills are now more concentrated in the economically advanced states. More skilled and educated employment, including in modern services, have raised wage levels and household incomes, but also living costs in Selangor-Kuala Lumpur and Putrajaya above other states.

Employment and vulnerability

The more economically developed states have lower unemployment rates. In 2019, close to four-fifths of working people in these states were paid employees, mostly in standard employment relations. Shares in paid employment were 71% in Sabah and Sarawak and 68% in the poorer states of Peninsular Malaysia, which include Kelantan, Perlis, Kedah, Pahang and Perak, but not Terengganu.

Between 1982 and 2019, unemployment in the more advanced states averaged under 3%, and slightly more in the less-developed states. Unemployment rates for women, rural areas, the less educated and younger people and in Sabah and Sarawak were also generally higher. Less-advanced states have more employed in small and medium enterprises (SMEs), which typically have more decent work deficits.

Thus, precarious employment, including own account and unpaid family workers constituting vulnerable employment, has been rising with more sluggish growth since the turn of the century. Although employment conditions appeared stable before the pandemic, increasing numbers in the economically advanced states were experiencing decent work deficits.

Investments, technology and the pandemic

Industrialisation grew rapidly with investments in the early and mid-1990s, but slowed as services, mainly traditional, became more important. As investments slowed, the country deindustrialised, becoming more service-oriented.

Capital accumulation, averaging 16% annually from 1989 to 1997, fell to around 6% yearly from 1999 to 2019. Reduced investments slowed long-term growth as investments in modern services declined with high-technology manufacturing. Less R&D also lowered demand for highly educated employees.

Traditional services’ jobs grew as modern and social services employment relatively declined in the past decade. Sales and services work, accounting for about a quarter of total employment in Malaysia, is at greater risk due to increased automation.

Half of existing jobs, mostly those considered semi-skilled, are considered to be at greater risk of being automated, with the pandemic probably accelerating this trend. Moreover, Covid-19 may accelerate the automation of some jobs that cannot be done from home during the pandemic.

However, timely and appropriate policy interventions can ensure that workers are upskilled or reskilled to anticipate, rather than be displaced by, technological advances. Flexibility and openness to innovation and willingness to adopt new technologies would also ease such transitions.

Melayu Baru

One early reaction to Vision 2020 was the notion of Melayu Baru, which sought to assert a new self-confident Malay in bangsa Malaysia but get rid of the supremacist racist pretensions of “ketuanan Melayu”.

The notion of “ketuanan Melayu” was first advanced in 1986, after Mahathir announced economic, educational and cultural liberalisation following the economic downturn and political challenges of the mid-1980s.

Mahathir successfully courted Pakatan Harapan leaders to take over PH leadership before its victory in the May 2018 general election. While as PM7, he worked with others within and outside PH to use ethno-populism to keep his other PH partners in check, perhaps hoping to eventually lead a government of national unity as the seemingly indispensable leader.

Today, Umno and Pas have successfully hijacked the new discourse of Malay-Muslim unity, with the DAP designated “bogeyman”, a caricature some culturally insensitive DAP leaders seemed all too ready to confirm, inadvertently undermining the popular legitimacy of PH, especially its Malay leadership.

Beyond 2020

Can the nation’s future be saved or at least salvaged from the debris of the decades? Or is Malaysia condemned to continue replaying newer versions of the same old ethno-populist tunes, for a farcical tragedy with new casts and sets, while smug in our culture of self-congratulation and self-delusion?

Malaysian politics since February this year is slowly but surely exposing the emptiness of all ethno-populisms. But tragically, unlike in 1971 or 1991, there is no shared alternative national project ready to fill the vacuum left by the expiry of Vision 2020 and the earlier post-May 1969 quest for national unity with the Rukun Negara and the NEP.

Although the Vision 2020 alternative was wounded and abandoned, its envisioning and ensuing efforts in its name, however brief and compromised, remind us that all is not lost. For all patriots of goodwill, it is imperative to strive yet again despite the odds.

The Vision 2020 commitment is to establish a modern, industrialised, developed and united Malaysian nation. The potentially progressive nationalism of the Rukun Negara plus NEP and, later, Vision 2020 is still urgently relevant. Today, not only does the nation remain divided but the major political tendencies strive to split it further, albeit in the name of rival ethno-populism.

And while most post-colonial societies struggle to overcome colonial legacies and to cope with contemporary hegemonic rivalries, ethno-populist jingoism invokes nationalistic rhetoric to serve narrow reactionary agendas. To make things worse, internal divisions have not only compromised national resolve but also allowed hegemonic foreign interests and ideologies greater influence.

Undoubtedly, today’s Covid-19 pandemic as well as containment, relief and recovery measures are not only disruptive but also costly. But its dangers and threats also offer new opportunities to move forward, albeit to a less certain future, which certainly cannot be either a throwback to business as usual or an unchanging new normal.

We can only emerge stronger as a nation if we pull together, instead of working at cross-purposes for political advantage and economic gain. Covid-19 underscores the need for an all-of-government approach, unifying the whole of society, acknowledging the inevitable while striving to make the most of the new circumstances in the near, medium and long term.


Jomo Kwame Sundaram, a former economics professor, was United Nations assistant secretary-general for economic development. He is the recipient of the Wassily Leontief Prize for Advancing the Frontiers of Economic Thought.

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