Auto sector needs to tackle labour crunch to drive recovery, say analysts
Published on: Thursday, May 05, 2022
By: Bernama
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The Proton Vendors Association says recruiting foreigners may solve the labour shortage, but analysts say better wages will lure local workers.
Kuala Lumpur: The automotive sector, which has recorded a sales uptrend this year, needs to address the issue of manpower shortage to drive its recovery momentum beyond the sales tax exemption period which ends on June 30, according to industry players and analysts.

After being hit by the closure of assembly and production facilities as well as showrooms during the pandemic-induced lockdown, the automotive industry is gearing up to meet the pent-up demand.

But does the industry provide wages that are sufficiently attractive to woo local and foreign workers, especially as people are manoeuvring through the higher cost of living?

The Proton Vendors Association has touted the intake of foreign workers as a solution to prevent disruption to the national automotive manufacturing ecosystem, saying if it collapsed, it would lead to the loss of more than 500,000 jobs as well as wiping out up to 4.5% of the nation’s gross domestic product.

Attracting local talent through better wages

Automotive analyst Shamsul Yunos urged the industry to review what it considers as fair wages as part of the solution for overcoming the manpower shortage.

“Increasing wages is important for the industry to attract the talent that is available in this country, and this requires companies to work on a business plan that adds more value to their products so they can pay better wages,” he told Bernama.

Shamsul was opposed to the use of foreign labour unless absolutely necessary.

“It is very rarely about the unavailability of labour but simply about the reluctance of businesses to pay fair wages,” he said.

Hans Cheong, head of content at the automotive news and review site WapCar.my, said the debate on allowing more foreign workers was just a symptom of a bigger problem which was not unique to manufacturing, but to blue-collar workers in general.

“Even car workshops are facing a chronic shortage of technicians, and companies doing maintenance for heavy machinery used in the construction industry are also having trouble finding enough skilled labour,” he said.

He said the debate on legalising foreign workers did not address the root cause of the problem.

“Local industries lack scale and competitive products to invest in automation, so they continue to rely on cheap labour and will forever be asking for assistance,” he said.

Timely to look at automation

Bank Islam Malaysia Bhd chief economist Afzanizam Abdul Rashid said automation had always been the buzzword when it came to efficiencies and productivity.

“So, perhaps it is time to look at the current setting, whether it is sustainable or otherwise. Then we look at the local talent. Are there sufficient local engineers or technicians who can serve the industries?

“Is there a gap in our local talent in terms of skill set? And what are the measures to reduce the gap? Judging from the automotive industry’s response, it seems that they have taken all those steps (to resolve the issue),” he said.

“Perhaps the final piece of the puzzle lies in the local talent’s attitude towards work and this can be very tricky as the problem may not be straightforward to identify.

“In reality, to earn a better pay, it will take some time. We, as employees, need to prove ourselves and show that we are the right talent and can do the job better — and we would eventually command a certain premium based on the skills that we can offer over time,” he said.

Sector’s bright outlook

The Malaysian Automotive Association has forecast a 17.9% growth in total industry volume to 600,000 units for 2022, from 508,911 units recorded last year.

In January, its president, Aishah Ahmad, said passenger and commercial vehicle sales were expected to reach 540,000 and 60,000 units, respectively, this year.

“The global economy is expected to rebound post-pandemic as economies worldwide have largely opened up.

“The sales tax exemption incentive for passenger vehicles till June 30, and ramping up of production and deliveries by automotive companies to fulfil backlog and new orders will be the main contributors to improving sales,” she said.

Besides that, Bank Negara Malaysia was not rushing to raise the overnight policy rate (OPR), hence providing an additional stimulus to the sector.

At its monetary policy meeting in March, the central bank decided to maintain the OPR at 1.75%.


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