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“We aim to be the human capital
development authority in strengthening the
economic development of
Malaysia”
-PSMB Vision
PEOPLE | PROWESS | PROGRESSMay 3, 2023
The Role of Training Levies in Financing the Expansion of Technical and Vocational Education and Training (TVET) in Southeast Asia: The Experience of Malaysia through the
HUMAN RESOURCES DEVELOPMENT FUND (HRDF)
By : Rony Ambrose Gobilee Planning, Strategy & Development Division, HRDF
CONTENT
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ABOUT THE HUMAN RESOURCES DEVELOPMENT FUND (HRDF)
1
HRDF ROLES IN HUMAN CAPITAL DEVELOPMENT OF MALAYSIA
2
THE NATIONAL AGENDA ON HUMAN CAPITAL DEVELOPMENT
3ISSUES & CHALLENGES TO MEET THE NATIONAL AGENDA ON HUMAN CAPITAL DEVELOPMENT4
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THE NATIONAL AGENDA ON HUMAN CAPITAL DEVELOPMENT
1
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THE NATIONAL AGENDA ON HUMAN CAPITAL DEVELOPMENT
CHAPTER 5: ACCELERATING HUMAN CAPITAL DEVELOPMENT FOR AN ADVANCED NATION
The Malaysian Government aims to achieve 35% of skilled workers by Year 2020.
Creation of over 1.5 million new jobs by the Year 2020.
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THE NATIONAL AGENDA ON HUMAN CAPITAL DEVELOPMENT
The three major occupational groups are skilled workers, semi-skilled and low-skilled. Skilled workers comprise managers, professionals and technicians and associate professionals. Semi-skilled workers comprise clerical support workers, service and sales workers, skilled agricultural, forestry and fishery workers, craft and related trade workers, and plant and machine operators and assemblers. Low skilled workers comprise elementary occupations.
Source: Eleventh Malaysia Plan (2016 – 2020), Economic Planning Unit
• Skilled workers are projected to comprise 35% of the workforce by 2020. • Existing industries will be encouraged to move up the value chain by investing
in high value added activities that require skilled workers
Creation of more high-skilled jobs
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HIGHLIGHTS ON HRDF IN THE ELEVENTH MALAYSIA PLAN (11TH MP)
Chapter 5: ACCELERATING HUMAN CAPITAL DEVELOPMENT FOR AN ADVANCED NATION
FOCUS AREA CStrengthening lifelong learning for skills enhancement
EXPANDING HUMAN RESOURCES DEVELOPMENT FUND (HRDF) ACT COVERAGE• The coverage of the HRDF Act, 2001, will be expanded
to include more subsectors under the services and agriculture sectors…
• …HRDF will also collaborate with SME Corp to provide training to SMEs not covered under the HRDF Act…
SUPPORTING PRE-EMPLOYMENT TRAINING THROUGH THE FUTURE WORKERS TRAINING SCHEME• The Future Workers Training (FWT) Scheme will be
established under the HRDF to promote pre-employment training focusing on emerging technologies…
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ABOUT THE HUMAN RESOURCES DEVELOPMENT FUND (HRDF)
2
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Establishment of Human Resources Development Fund (HRDF) through Human Resources Development Act,
1992
2001Known as Pembangunan Sumber Manusia Berhad (PSMB) via the PSMB Act,2001
2005Appointment of PSMB as the Training Coordinating
Body for SMEs from the National SME Development Council (NSDC)
2020Malaysia as a Developed and High Income Status with 35% of Skilled Workforce
Establishment of National Human Resources Centre (NHRC) as a one-stop centre for SMEs in Human Resources Management
2011
2014Expansion of the PSMB Act, 2001 to cover 19 new sub-sectors
1993
Implementation of 1Malaysia Globally Recognised Industry and Professional (1MalaysiaGRIP) Programme
20152016Implementation of HRDF Pool Fund
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OUR VISION & MISSION
Spearheading the human capital learning and development through strategic interventions that fulfil the current and future needs of the industry
To be the human capital development authority in strengthening the economic development of Malaysia
MISSION
VISION
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COVERAGE OF PSMB ACT, 2001
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SECTORS COVERED UNDER THE PSMB ACT 2001
MANUFACTURING
SERVICES
MINING & QUARRYING(Effective June 2014)
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Service Sector1. Energy2. Hypermarket/Supermarket/Departmental Store3. Direct Selling4. Commercial Land Transport and Railway Transport
Services 5. Warehousing Services6. Port Services7. Hotel Industry8. Freight Forwarding9. Shipping10. Air Transport11. Tour Operating Business (In-bound only)12. Postal or Courier13. Telecommunication14. Research & Development15. Engineering Support & Maintenance Services16. Security Services17. Computer Services18. Advertising19. Private Hospital Services20. Higher Education
22. Training23. Gas, steam and air-conditioning supply24. Water treatment and supply25. Sewerage26. Waste management and material recovery
services27. Food and beverage services28. Production of motion picture, video and
television programme, sound recording and music publishing
29. Information service30. Tourism enterprise31. Building and landscape services32. Event management services33. Early childhood education34. Health support services35. Franchise36. Sale and repair of motor vehicles37. Private broadcasting services38. Driving school39. Veterinary services
SECTORS COVERED UNDER THE PSMB ACT 2001
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1. Electrical and Electronic2. Metal Product3. Mineral Product4. Food and Beverages5. Transport Equipment6. Plastic7. Wood & Wood based and Cork8. Machinery9. Industrial Chemicals10. Paper and Pulp11. Iron and Steel12. Rubber Product
14. Furniture and Fixtures 15. Printing and Publishing16. Textile and Apparel17. Petroleum and Coal18. Optical and Photography19. Glass and Glass Product20. Petroleum Refinery21. Footwear22. Ceramic 23. Tobacco24. Leather
Manufacturing Sector
1. Petroleum and gas extraction2. Mineral and stone quarrying
Mining and Quarrying Sector
SECTORS COVERED UNDER THE PSMB ACT 2001
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OUR REGISTERED EMPLOYERS
REGISTERED EMPLOYERS
38 SUB-SECTORS
23 SUB-SECTORS
10,077REGISTERED EMPLOYERS
7,100
1,025,507EMPLOYEES
COVERED
943,810EMPLOYEES
COVERED
2 SUB-SECTORS
58REGISTERED EMPLOYERS
14,809EMPLOYEES
COVERED
63 SUB-SECTORS
17,235REGISTERED EMPLOYERS
1,984,126EMPLOYEES
COVERED
Services Manufacturing Mining & Quarrying
as at 31st August 2016
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EXPANSION OF PSMB ACT, 2001
2014 : Expanding the coverage of the PSMB Act, 2001 so that employers from 19 new sub-sectors can be registered
To increase the number of skilled workforce from 28% to 35% by year 2020
This effort is also in line with the NEM which inspires to up-skill the current workforce, in particular those from the bottom 40% of households, by way of continuous training and
education.
assist
Expanding the coverage of the PSMB Act, 2001 so as to provide a wider access to training fund where the number of employees that will be eligible for training under HRDF will increase from 1.77 million in 2014 to 2.8 million in 2020 which is an increase of 58%.
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HRDF ROLES IN HUMAN CAPITAL DEVELOPMENT OF MALAYSIA
3
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VARIOUS SCHEMES / SERVICES OFFERED BY HRDF
HRDF provides its registered employers with various schemes / services in order to encourage employers covered under the Pembangunan Sumber Manusia Berhad Act, 2001 to retrain and upgrade the skills of their employees, apprentices and trainees in line with their business needs and the development strategy of the country.
There are 12 schemes / services offered by HRDF, namely:
1. Training Assistance Scheme (SBL)
2. Special Training Assistance Scheme(SBL-
Khas)
3. Purchase of Training Equipment and Setting
Up of Training Room
4. Information Technology and Computer-Aided
Training
5. Industrial Training Scheme
7. Recognition of Prior Learning (RPL)
8. Future Workers Training (FWT)
9. Computer based Training
10. SME Training Partners (SMETAP)
11. Train The Trainer (TTT)
12. SME Training Needs Analysis (SME
TNA)
13. SME On-the-Job (SME OJT)
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STATISTICS ON APPROVED TRAINING PLACES AND GRANT DISBURSEMENT
2011 2012 2013 2014 2015 2016*0
100,000
200,000
300,000
400,000
500,000
600,000
700,000
800,000
900,000
0
50
100
150
200
250
300
350
400
450
500
721,797 754,324 781,438 702,232 836,368 589,010
289.02
354.80
402.92372.42
450.11 454.41
APPROVED TRAINING PLACES GRANT DISBURSEMENT (RM mill)
Trai
ning
Pla
ces
RM
mill
* As at 31st August 2016
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SPECIAL PROGRAMME UNDER GOVERNMENT FUND
SMALL AND MEDIUM ENTERPRISES• Training Incentives Programme for SMEs• Skills Upgrading Programme• Training Fund under Minimum Wage
EMPLOYEES• 1Malaysia Globally Recognised Industry and Professional
Programme(1MalaysiaGRIP)• Train & Replace Programme• 1Malaysia Outplacement Centre (1MOC)
FUTURE WORKERS• Apprenticeship Scheme• Housewives Enhancement and Reactivate Talent Scheme (HEARTS)• Future Workers Training (FWT) Scheme
COMMUNITY• Special Programme Intended for Community Enrichment (SPICE)• Entrepreneurship Enhancement Skills Programme for Indian Community
(EMPhAtIC)
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THE EFFECTIVENESS OF HRDF• The Net Impact of 1% Levy Payment for SMEs• Effectiveness Study of the Human Resources
Development Fund (HRDF) • Outcome-based Study on the Apprenticeship
Scheme• Percentage of Skilled Workforce Among HRDF
Registered Employers• Effectiveness Study of the Training Incentive
Scheme
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THE NET IMPACT OF 1% LEVY PAYMENT FOR SMEs
Source: World Bank based on census and survey from Department of Statistics, Malaysia – SME Masterplan 2012-2020
NET IMPACT OF HRDF
It is found that training programmes by HRDF indicated a strong positive impact including effects on productivity (Total Factor Productivity and Labour Productivity).
The highest impact was on investment in machinery and equipment and capital intensity followed by increase in value added and TFP.
This programme also showed increase in labour productivity and wages.
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EFFECTIVENESS STUDY OF THE HUMAN RESOURCES DEVELOPMENT FUND (HRDF)
Further findings have shown that training were able to effectively give impacts to the actual business results in terms of …
The study found that HRDF training schemes were effective in terms of…
Source: Study on the Effectiveness of Human Resources Development Fund (HRDF) by Saujana Edu Urus Sdn. Bhd.
• Increasing the employees’ knowledge and skills
• Increasing companies’ performance
• Improving companies’ productivity level
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OUTCOME-BASED STUDY ON THE APPRENTICESHIP SCHEME
APPRENTICE BEING EMPLOYED WITHIN 6 MONTHS AFTER COMPLETION OF TRAINING
96%
95% APPRENTICES SATISFIED WITH THE QUALITY OF TRAINING DELIVERY DONE BY TRAINING PROVIDERS AND SPONSORING EMPLOYERS
97%APPRENTICES RECEIVED STARTING SALARY MORE THAN RM900 (MINIMUM WAGE)
98%SAID THAT SALARY OFFERED BY THEM WERE ALIGNED WITH APPRENTICES’ SKILLS AND EXPERIENCE GAINED BY THEM DURING TRAINING
85%SATISFIED WITH PERFORMANCE SHOWED BY APPRENTICES AT WORKPLACE
EMPLOYERS WERE SATISFIED WITH APPRENTICES’ SKILLS AND KNOWLEDGE THAT ARE IN-LINE WITH ORGANISATION’S WORKING ENVIRONMENT. THEY ALSO PROVIDE OPPORTUNITY FOR APPRENTICES TO APPLY THEIR SKILLS IN THE ORGANSATIONS
APPRENTICE EMPLOYERS
Source: Outcome-based Study on the Apprenticeship Scheme under 2013 Allocation
41.2%APPRENTICES RECEIVED MORE THAN RM1,500 AS THEIR STARTING SALARY
45.9%APPRENTICES RECEIVED MORE THAN RM1,500 AS THEIR STARTING SALARY
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PERCENTAGE OF SKILLED WORKFORCE AMONG HRDF REGISTERED EMPLOYERS
28% 38%SKILLED
WORKFORCE
Nation HRDF
Percentage of skilled workforce under HRDF coverage are 38%Note:Definition of Skilled Workers was based on the Department of Statistics (DOS) job positions category: Managers, Professionals and Technician and Associate Professionals
Source: Study on the HRDF Registered Employers’ Employees’ Skilled Bracket 2014Note: Data were based on NER 2011 by ILMIA, Ministry of Human Resources
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EFFECTIVENESS STUDY OF THE TRAINING INCENTIVE SCHEME FOR SMEs
Majority of respondents cited that the scheme has positive impacts on employees in the areas of:
Source: Study on the Effectiveness of Training Incentive Scheme (2011/2012 Allocation) by Frost & Sullivan
They also have seen the difference between trained employees and non-trained employees under this programme in terms of:
Enhanced Job-Relevant Knowledge and Skills
Improved productivity
Increased Job Motivation of Trained Employees
Reduced Levels of Absenteeism (Sick Leaves and No-Shows)
• More motivated than non-trained employees
• More productive than non-trained employees
• More likely to be promoted than non-trained employees
• More likely to receive a salary increment than non-trained employees
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ISSUES & CHALLENGES TO MEET THE NATIONAL AGENDA ON HUMAN CAPITAL DEVELOPMENT
4
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1%
99%
Certification Certificate of Attendance
Page 27
THE EFFECT FROM GIVING FULL AUTONOMY DECISION TO EMPLOYERS TO DETERMINE EMPLOYEES’ TRAINING
Analysis on the HRDF internal data was done in order to understand the effect of the existing mechanism. Findings of the study are as follows:
• Employers tend to send their employees for non-technical training (e.g.: Teambuilding / Motivation);
• Employees were sent to non-professional certification courses; and
• Increased in the unutilised HRD levy balance.
FINDING 1
FINDING 2
FINDING 3
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HRDF APPROACH TO OVERCOME THOSE ISSUES & CHALLENGES
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CURRENT APPROACH / MECHANISM
EMPLOYERS
LEVY PAYMENT
Fulfilling Business Needs
COMPANY INDIVIDUAL ACCOUNT
BUSINESS PERSPECTIVE
• Focusing on Business Plan / Activities
• Company Performance Related
• Business Sustainability
• Business Productivity and Profitability
CURRENT MECHANISM
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THE NEED FOR A DIFFERENT APPROACH
EMPLOYERS
LEVY PAYMENT Fulfilling Business Needs
SUPPORT NATIONAL AGENDA
POOL FUND
COMPANY INDIVIDUAL ACCOUNT
MACRO LEVEL
BUSINESS PERSPECTIVE
BENEFITS TO THE INDUSTRY
MACRO
LEVEL IN
TERNVEN
TION
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THE NEED FOR DIFFERENT APPROACH – IMPLEMENTATION OF HRDF POOL FUND
100%HRD Fund
70%In
divi
dual
Em
ploy
ers
Employees’ training by Employers
30%Con
solid
ate
1. Outplacement Centre (Retrenched Workers)
2. Train and Replace (Replacement of Foreign Workers)
3. SMEs Up-skilling & Re-Skilling Programmes
4. Programmes for Future Workers
5. Certification / Value Added Programmes Identified by the Sectorial Training Committees (STCs) / Special Fund for Industrial Association Programmes
IDEN
TIFIED
STRATEG
IC IN
ITIATIVES
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BENEFITS TO THE INDUSTRY
Increase labour supply in strategic and high impact areas that have been identified to reduce the country’s dependency on external expertise and support the Government’s aspiration to achieve developed nation status by the year 2020 through a 35% skilled local workforce
Equip the Malaysian workforce with more certification-base courses that will enhance the quality of their work; positively impacting the performance of their organisation.
Tactical driven skills certifications will allow the Malaysian workforce to gain a competitive advantage over their foreign counterparts working in Malaysia. In addition, employers with skilled workforce will be able to explore new and bigger business opportunities as they become more competitive in the global marketplace.
Assist employers of SMEs with insufficient levy balance to continuously train and upgrade the skills of their employees through the use of the pool fund.
More funding could be generated to the industries that have identified their specific training needs
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GET IN TOUCH WITH US
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OUR LOCATIONS
Johor BranchNo. 50 & 50-01, Jalan Setia 3/7, Taman Setia Indah81100, Johor BahruJohor. Tel : (07) 3538121Fax : (07) 3538217
Northern BranchTingkat 2, Wisma PERKESO,Lebuh Tenggiri 213700, Seberang Jaya, Pulau Pinang. Tel : (04) 3970779 Fax : (04) 3987350
Sarawak BranchWisma PERKESOLevel 4, Lot 436, Section 54, No. 52Travilion Commercial Centre Padungan 93100 Kuching, Sarawak. Tel : (082) 254 721Fax : (082) 254 795
Sabah BranchLot B5, Tingkat 5, Bangunan KWSP,88598, Kota KinabaluSabah. Tel : (088) 260 114Fax : (088) 252 114
Melaka BranchLot 4-04, Wisma UTC,Jalan Tan Chay Yan,Off Jalan Hang Tuah75300 Melaka. Tel: (06) 282 1537Fax: (06) 282 1536
HEADQUARTERS Pembangunan Sumber Manusia Berhad (545143-D)Wisma HRDFJalan Beringin, Damansara Heights50490, Kuala Lumpur. Toll Free Line 1 800 88 4800General Line: (03) 2096 4800General Fax: (03) 2096 4999Website: www.hrdf.com.my I www.nhrc.com.my
East Cost BranchPusat Latihan Hospatiliti Cherating, Perkampungan Cherating Lama, 26080 Kuantan, Pahang. Tel : (09) 581 9250 Fax : (09) 581 9268
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