The following is written by our reader klm, in response to my article “Can webecome a high income country?” which can be viewed here.
Can Malaysia be a high income country? A Macro view of jobs and labour .
By KLM, Economist Burok.
What is a high income country? The World Bank definition is : Income group: Economies are divided according to 2008 GNI per capita, calculated using the World Bank Atlas method. The groups are: low income, $975 or less; lower middle income, $976 – $3,855; upper middle income, $3,856 – $11,905; and high income, $11,906 or more.
How to get there? Go up the value chain, knowledge industry etc. The strategy is well known and discussed.
But what does it really mean. One way of looking it is to view from the point of jobs and compare it to other countries.
Comparison of Income Groups By Countries
High income countries have a labour profile of at least a third of more if its population in high income jobs and a third or less in low income jobs. Singapore is the extreme end of this profile with 51% of its population in the high income occupations. This occupation distribution changes according to the classification of the country.
Occupational Distribution By Countries
High Income : Senior officials, Professionals, Managers, Executives & Technical workers
Medium Income : Clerical, Sales & Service Workers
Low Income : Production & Transport Operators, Cleaners & Labourers
|Classification||Lower Middle Income||Upper Middle Income||High Income||High Income|
|GDP/Capita(2008)||4,400 USD||8,324 USD||18,966 USD||44,113 USD|
Distribution of occupations by population
Singapore saw a rapid change in the distribution of occupations, especially in the high income jobs, with 51% of the population in the high income job category , the highest in the developed countries. The change is fueled by migration of knowledge workers from Malaysia and other countries.
The changes in the distribution of occupations in Malaysia is moving slowly. This is an indication of the lack of structural changes in its industries reflecting in the slow demand for knowledge workers. This is already well known issue. Slow demand and low pay for knowledge workers led to migration of these workers to other countries – the Malaysian brain drain problem.
Occupation Distribution of Employed Residents 2001 to 2008
It is obvious that to become a high income country, the distribution of occupations need to evolve with more than a third of the population in high income jobs. This requires industries that use more knowledge workers and the ability to supply high quality knowledge labour. It was reported that Penang Chief Minister Lim Guan Eng told Parliament recently that the state lost US$3 billion (RM10.2 billion) worth of foreign investment because it could not “commit to having 1,000 engineers”.
Recently the PM had acknowledged the fact that Malaysia had achieved success in the past by growing an industrial base and expanding its agricultural sector, he emphasised that more measures were needed to boost the economy and that the country can no longer rely on what had worked in the past.
What mix of high , medium and low income occupations is a question for the New Economic Model of Najib.
An excellent article backed with facts and figures. Thanks klm. 🙂