Covid-19 may deepen inter-state economic polarisation - study

 

A study has found deepening polarisation among the quality of jobs between more developed and less developed regions in the country - a trend that threatens to further entrench existing inter-state economic inequalities.

Launched today, the "The State of Households 2020 - Work in an Evolving Malaysia" report by the Khazanah Research Institute (KRI) charted how skilled jobs continued to be concentrated in Selangor, Putrajaya, Kuala Lumpur. 

These jobs typically offered higher pay as well as more social and legal protection.

This contrasted labour trends in less developed parts of the country, which saw a growth in low skilled jobs.

This was while semi-skilled jobs were on the decline.

“There is a trend towards job polarisation, where skilled and low skilled employed persons are increasing most rapidly.

“Between 2001 and 2019, skilled and low skilled jobs increased by 3.2 percentage points and 1.7 percentage points while semi-skilled jobs decreased by 4.9 percentage points.

“This job polarisation is contributed by the expansion of skilled jobs in more economically advanced states [...] and low-skilled jobs in less advanced states,” the report said.

The graph below shows the distribution of job types across four regional groupings - A (Kuala Lumpur, Selangor, Putrajaya), B (Johor, Malacca, Negeri Sembilan, Penang and Terengganu), C (Labuan, Sabah and Sarawak) and D (Kedah, Kelantan, Pahang, Perak, Perlis).

As seen above, East Malaysia saw the highest rise in employment share for low skilled jobs. A lesser extent of the trend was seen in Kedah, Kelantan, Pahang, Perak and Perlis.

The report analysed that workers in these regions were also more susceptible to lower wages, slower wage growth, vulnerable working conditions and more likely to be working in jobs they were overqualified for.

An increasingly overqualified workforce also suggested that not enough skilled jobs were being created in these regions.

The economic impact is that these regions typically see lower labour participation, lower productivity and higher unemployment.

“As job creation continues to be a high priority rather than job quality, jobs with decent work deficits could be more likely to be found in these states, thereby contributing to a vicious cycle of poor jobs and poor economic performance,” the report cautioned.

Covid-19 exacerbates polarisation

The report also warned that the Covid-19 pandemic threatened to automate and wipe out more semi-skilled jobs, especially those in the sales and services sectors.

Such jobs, it analysed, were less resilient as workers were rarely able to work from home.

This could further deepen the polarisation between skilled and low-skilled jobs plus further widen economic inequalities across regions.

“If movement restrictions have to be extended for a long period, we may risk the permanent loss of non-teleworkable semi-skilled jobs, further aggravating the job polarisation trend,” it said.

Invest in other states, upskill workers

During today’s online report launch, co-author Siti Aiysyah Tumin explained that one reason for the concentration of skilled jobs in more developed states was because these regions were already hubs for businesses that offered those jobs.

Businesses in sectors like high technology manufacturing and “modern services” like finance, real estate and IT.

“And so when these sub-sectors grow, in turn, they will hire a more skilled workforce,” she said.

“Policymakers should focus on thinking about how we can help the less advanced states [...] to shift from hiring low skilled (workers), to semi-skilled and skilled workers,” she added.

The other two authors of the report are Nur Thuraya Sazali and Hawati Abdul Hamid.

The KRI report also proposed the government help businesses manage a transition into digitisation and automation by encouraging upskilling of workers.

“The transition process for these firms should also be supported by investments to improve workers’ skills so that they can operate the new technologies installed to improve productivity and business resilience.

“Simply put, we must ensure that workers complement technological advancements rather than simply being substituted by them,” it said.

It further called for policies that improved labour standards, resilience and ultimately productivity across all job types.

“Instead of minimising short-term costs, profitability could be enhanced and sustained through productivity improvement, achieved by promoting safer jobs with better employment arrangement.

“This commitment to decent work can coax businesses to move up the value chain, triggering a virtuous cycle of higher productivity with better jobs and wages. In turn, employed persons with better jobs have households less vulnerable to shocks and stress,” the report said.  - Mkini