Revamp HRD Corp for a TVET revolution

 

In their 2023 annual report, HRD Corp celebrated raising RM2.13 billion in compulsory levies but they spent only RM1.52 billion on actual training, with an average value of RM662 per trainee.

Directors fees cost RM3.4 million, RM25.7 million was spent on conferences, promotion, travel and consultants and RM18.0 million on property management, repairs and maintenance. They even gave away RM4.7 million of levy revenue in CSR.

Meantime, in the labour market, employers complain of a shortage of skilled workers and 1.7 million people are in skills-related underemployment.

People go into post-school training for many reasons one of which is that they cannot get a job straight from school. So higher enrolment in TVET may be due to poor job opportunities for school leavers.

More positive reasons are that TVET programmes are more practical and train directly for jobs that are available. Employment rates are higher for TVET graduates and they learn transferable skills that can be useful to different employers. TVET courses are also cheaper and often shorter than university degrees. So the cost is less of a barrier and TVET graduates earn a wage more quickly.

Despite this, it is still possible that TVET graduates are facing similar outcomes as university graduates where the system has produced so many but there are not enough jobs for them.

So far, TVET graduates are in demand in the labour market and, depending on the course, they will continue to be in demand.

We will need mechanics, electricians, plumbers, hairdressers, caterers and care workers for the foreseeable future and these will be the most in-demand job types. So the underemployment issue is less acute for TVET graduates than university graduates.

In fact, many students in university should actually be in TVET courses which would suit them better and help them get what they need quicker. But this process must be driven by industry demands not by government interference.

The government wants minimum pay for TVET graduates at RM3,000 per month but, as expected, employers have pushed back and this time they are justified. Instead of more regulation, HRD Corp should be given a new role within a deregulated, rationalised TVET eco-system.

The market should determine wages above the minimum wage within existing regulations on wages and the new progressive wage. There is no particular need for a separate regime for TVET graduates.

The government also has no business regulating to ensure that an investment in TVET will be value for money. It cannot do this unless it makes TVET free by paying the tuition fees to guarantee a net positive return on investment.

An essential reform is to consolidate the TVET budget, remove replication across multiple ministries and cut out wastage, leakages and corruption in TVET programmes.

One way to do this is through a TVET voucher to be used by students in any training programme they choose. The government currently spends RM6.8 billion on TVET programmes: equivalent to around RM3,500 for everyone unemployed or underemployed. This is enough to create a TVET market and improve choice, innovation and quality through competition.

Interference by previous governments in the TVET market has caused the problems the unity government must address now by stopping the interference and rationalising HRD Corp.

The levies should end, and the balance of funds should be returned to the employers who paid them with any remaining assets redeployed in a market-driven TVET eco-system fit for the current and future workplace. - FMT

The views expressed are those of the writer and do not necessarily reflect those of MMKtT.