1. UNLEASHING THE POTENTIAL OF INDUSTRIES
The Third Asia KLEMS Conference
12-13 August 2015
Structural Changes and Productivity Growth
in Malaysia
UNLEASHING THE POTENTIAL OF INDUSTRIES

2. Malaysia on is on track

3. Malaysia’s productivity grew at 2.1% in 2001-2014
Malaysia’s productivity growth lagged employment growth for the past 14 years
Malaysia’s productivity dynamics are susceptible to structural challenges namely GDP dependent on employment growth

4. Malaysia has yet to reach the world productivity growth, set by the USA in 1980
The frontier set by the USA in 1980 is used as a benchmark for productivity growth worldwide.
Malaysia’s labour productivity performance of USD 25,090 in 2013 still falls far behind the USA’s performance of USD41,649 in 1980.

5. Malaysia relying on employment as the contributing factor to achieve higher economic growth
Emerging & developing economies are able to maintain higher contribution of productivity to GDP growth in the recent period relative to earlier period.
Different scenario was observed among the developed economies – higher contribution of labour to GDP.
Malaysia relying on the additional workers as the contributing factor to achieve higher economic growth. Malaysia has the potential to challenge the frontier by building learned values-driven talent, knowledge workforce that meet the 21st-century global needs and have the ability to become a job-creator rather than job- seekers.

6. Malaysia have a great deal of untapped productivity potential
Added Value Growth Contributions by Selected Sector/Industry, (average percentage points )
Malaysia’s economic growth is mainly contributed by capital and labour.
Since, Malaysia depends on labour for its economic growth, the country should tap industry with more quality labour that could generate productivity.
Source: ASEAN KLEMS Database and Malaysia KLEMS Database
Note: TFP - Total Factor Productivity, KICT - ICT Capital, KNICT – Non-ICT Capital, MH – Total Man Hours Worked, LC – Labour Composition

7. Services sectors has a larger potential in generating employment
Sub-sectors with Strong Forward and Backward Linkages Potential in Generating Employment
The services sector should be given emphasis as this sector shows a potential of employment generated as well as to enhance productivity and output of sectoral growth
The services sub-sector that should be given on Professional, which ranked top 5 in forward and backward linkages in generating employment. That is the quality labour.