Global Index diagnoses tightening labour market flexibility in Malaysia


Pressure on Malaysia’s labour market is attributed to tightening labour market flexibility, according to the 2016 Hays Global Skills Index released today which assesses the efficiency of skilled labour markets in 33 countries.


The Hays Global Skills Index, produced in collaboration with Oxford Economics saw Malaysia receive an overall score of 5.1, showing the labour market is performing moderately well in line with historical performance. Six indicators, or points of potential pressure, make up the ranking and each received a score out of 10. A score close to 0 indicates little to no pressure, while a score close to 10 shows severe pressure. 


“Malaysia has emerged fairly resilient to external economic factors this year, with stronger GDP growth expected compared to our neighbours. While currency devaluation, increasing taxes and costs have resulted in slower business growth, a fundamental shortage of skilled talent in Malaysia bolsters hiring sentiment,” says Tom Osborne, Regional Director of Hays in Malaysia.


The Index shows that the top 3 indicators placing pressure on Malaysia’s labour market come firstly from ‘labour market flexibility for which Malaysia received a score of 6.1 indicating government legislation and support are not conducive to easy and flexible hiring. “Tightening labour regulations are increasingly becoming a barrier at the skilled end of the labour market, where employers are already struggling to secure the talent they need,” says Tom.


Additional pressure comes from a score of 5.4 for ‘education flexibilitywhich means the education system needs to keep up in terms of the academic and professional qualifications that are available to equip the future workforce.  


The third highest pressure point was “overall wage pressure” for which Malaysia received a score of 5.3. “This reinforces what we’re seeing on the ground, with specific skill shortages driving strong competition for top talent, and in turn placing upwards pressure on salaries,” Tom explains.


This is also backed by a score of 5.2 for wage pressure in high-skill industries where the high demand but short supply of available and highly-skilled talent in industries such as IT and manufacturing are causing salaries to rise more rapidly than seen in the past.


The final two indicators are positives for Malaysia’s labour market. The first is ‘wage pressure in high-skill occupations, scored at 4.9, telling us wages in high-skill occupations are keeping pace with the growth of salaries in low-skill occupations such as administrative professionals and unskilled workers.


The final indicator stands out as the most positive for Malaysia in the Index, which is the high ‘labour market participation rate scored at 3.7, suggesting healthy utilisation of the available workforce. “Initiatives that attract and re-introduce experienced professionals such as return-to-work mothers or Malaysian returnees back into the workforce, all have a positive impact on boosting the supply of labour and overall labour market performance,” Tom concludes.


About the Hays Global Skills Index

The Hays Global Skills Index assesses the efficiency of the skilled labour market in 33 countries, or its ability to supply skilled labour. It is a composite figure based on seven indicators, each with their own score. Three indicators explore the supply of talent, namely education flexibility, labour market participation and labour market flexibility. The final three are wage pressure indicators, looking at overall wage pressure, wage pressure in high-skill industries and wage pressure in high-skill occupations. One looks at talent mismatch, however due to the lack of availability of Malaysian structural unemployment data, we did not calculate Malaysia’s ‘talent mismatch’ score and therefore the overall Index

Score for Malaysia is calculated using six indicators.


A score of 5.0 indicates a balanced picture for labour markets, a score close to 0 indicates less intense competition for vacancies, and a score close to 10 shows severe difficulty in finding skills. 


The Hays Global Skills Index can be viewed at


Hays is located in Kuala Lumpur at Suite 4 & 5, Level 23, Menara 3, Petronas, Kuala Lumpur City Centre. Phone +60 3 2786 8600 or email


Hays, the world’s leading recruiting experts in qualified, professional and skilled people.


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About Hays

Hays plc (the "Group") is a leading global professional recruiting group. The Group is the expert at recruiting qualified, professional and skilled people worldwide, being the market leader in the UK and Asia Pacific and one of the market leaders in Continental Europe and Latin America. The Group operates across the private and public sectors, dealing in permanent positions, contract roles and temporary assignments. As at 30 June 2016 the Group employed 9,214 staff operating from 252 offices in 33 countries across 20 specialisms. For the year ended 30 June 2016:


– the Group reported net fees of £810.3 million and operating profit (pre-exceptional items) of £181 million;

– the Group placed around 67,000 candidates into permanent jobs and around 220,000 people into temporary assignments;

– 22% of Group net fees were generated in Asia Pacific, 45% in Continental Europe & RoW (CERoW) and 33% in the United Kingdom & Ireland;

– the temporary placement business represented 58% of net fees and the permanent placement business represented 42% of net fees;

– Hays operates in the following countries: Australia, Austria, Belgium, Brazil, Canada, Colombia, Chile, China, the Czech Republic, Denmark, France, Germany, Hong Kong, Hungary, India, Ireland, Italy, Japan, Luxembourg, Malaysia, Mexico, the Netherlands, New Zealand, Poland, Portugal, Russia, Singapore, Spain, Sweden, Switzerland, UAE, the UK and the USA.


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