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publication September 12, 2019

Monitoring Occupational Shortages-Lessons from Malaysia’s Critical Occupations List

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Malaysia’s shift to an economy based on high productivity and knowledge production has brought higher quality growth in the country. However, such shifts have created shortages in the labor market. To identify these shortages and monitor skills imbalances, the government of Malaysia has established the Critical Skills Monitoring Committee (CSC) which has published the Critical Occupations List (COL) since 2015.

As Malaysia’s labor market shortage list, the COL seeks to identify shortages in occupations that are sought-after by employers in the country and to help policymakers make decisions for targeted investments in human capital.

It is currently used as a source of labor market intelligence and information by many stakeholders including policy makers, training and higher education institutions, jobseekers and students. Malaysia’s COL also serves to inform immigration policy and is also used to inform the development of courses of study to meet industry demands. Looking ahead, the COL has the potential to help adapt workforce development policies to perform better in Industry 4.0 by increasing the responsiveness of upskilling and reskilling programs, improving the efficiency of the job-matching process for displaced and retrenched workers, and enhancing the responsiveness of immigration admissions decisions to economic needs.

However, the COL still faces challenges, but these are not unique to it. These serve as key lessons for other countries seeking to implement shortage lists.

  • Shortage lists should weigh the pros and cons of regional disaggregation
  • Shortage lists should invest in standardized occupational data

Malaysia’s experience in establishing COL offers several general lessons for other countries who are currently exploring tools to monitor skills shortages. These include:

  • Shortage lists are a useful tool for monitoring labor market shortages, and they are particularly critical now as new technologies disrupt labor markets.
  • Shortage lists should be updated regularly and improved continuously, should be based on rigorous evidence, and should be transparent. Governments can take advantage of new data sources, such as online job postings, to create lists that are up-to-date and include detailed information about skills requirements.
  • Shortage lists should be developed by a specialized agency but should incorporate evidence from public and private sector stakeholders.