KUALA LUMPUR: Malaysia will take longer than anticipated to increase the labour force's share of the economy, with the 2025 target of reaching 40 per cent likely to be missed.
The government had set a employee compensation (CE) to gross domestic product target (GDP) of 40 per cent for the 12th Malaysian Plan (12MP).
When CE increases as a proportion of GDP, it signals that the labour force is receiving a larger share of the economic pie, reflecting better remuneration for their work.
The Ministry of Finance's 2024 Economic Outlook report projected CE to GDP to improve to 33.1 per cent in 2024, from 32.4 per cent in 2023.
Economy Minister Rafizi Ramli said Malaysia will miss the 2025 target, but work to meet the compensation to economy ratio of 45 per cent within ten years of administration.
"It's still an extremely challenging target but we have started the ball rolling. A lot of it is function of labour market reforms. We have to accept that our workforce is not fit enough," he said in a fireside chat at the Forum Ekonomi Malaysia.
"As much as it is going to be a big challenge, we are on the right track because the sheer focus on wage increase is going to underpin all the other related economic plans that we have," added Rafizi.
Meanwhile, in his welcome address to kick off the forum this morning, Rafizi said the government is adopting a globalist perspective in policymaking for the the country's five-year development blueprint, 13MP, set to launch this year.
Rafizi the global environment is changing, requiring more careful thought and action, especially from small, open, and non-aligned countries like Malaysia.
Southeast Asia, in particular, will play a crucial role as the region's approach contrasts with global trends.
He said Malaysia and Southeast Asia must recognise their unique strengths to shape their own path in this pivotal decade.