Tag: 2020 Budget

You Need A Budget Part 2

Yesterday’s posting stirs quite the bee’s nest. Thank you for all the feedback and views shared.

In this second part, the issue I want to bring up is on Malaysian@Work initiative. Under the Malaysians@Work initiative, graduates who secured a job after having been unemployed for more than a year will receive RM500 per month from the government for a duration of two years.

Employers will also receive a hiring incentive of up to RM300 per month for each new hire over two years. The idea behind it is to create jobs for the unemployed graduates. With this, the Malaysians@Work initiative is expected to create an additional 350,000 jobs for Malaysians and reduce foreign worker dependency by more than 130,000 and will cost the government RM6.5 billion over five years. That is a lot of money.

Malaysias@Works initiative tabled in Parliament as part of Budget 2020.

It’s typical of politicians or bosses that don’t have connected brain cells. Before solving a problem, we need to to a little bit of RCA. Root Cause Analysis, find out what caused the issue, not just any cause, we must find the root cause and then fix it. 

Let’s dig a little why do we have so many unemployment in the country. Here’s a quote from MEF Salary Survey 2016:

“In order to enhance the employability of graduates, he stated that 90.3% of the respondent companies were of the view that it was important to improve the proficiency of English to increase the employability of graduates followed by developing soft skills, such as communication, problem solving and management skills (87%),” said Tan Sri Azman.

You guessed it right, it’s a skill issue. In this case, companies aren’t hiring our graduates due to communication skills issue. Apparently our graduates can’t speak nor write in English for shit. 

God forbid they learn English in school, but ohhhh, they must have Khat and they are willing to fight tooth and nail till Jannah, to have Khat in the syllabus, even if it’s for just 3 pages of Khat studies in the textbook. Fight till Jannah for Khat, but for english…that’s kafir! That’s is stupidity indeed. Alright, I digress, my apologies, back to the topic at hand.

English is the language of business here in Malaysia. In 5-10 years time, it will probably be Mandarin because China as an economic super power is almost guaranteed now.We have no choice but to equip ourselves with English and our kids with both English and Mandarin. Get angry at DAP all you want but the future of SJK (C) and the Manadarin language is here to stay. We may end up having Mandaring language as one of the subject in Sekolah Kebangsaan. The ability to communicate with English and Mandarin speakers will be more important in the future. Here’s the 2018/2019 Critical Occupation List and Top Associated Skills from World Bank. Take a look at the skills needed for the positions. Notice the pattern? Good.

I highlighted Chinese for clarity. And noticed English is in almost every position. Where’s Khat? Jawi? Let’s fight till Jannah.

Secondly, in the 2018 paper “Graduate Work-Readiness in Malaysia: Challenges, Skills and Opportunities” by Dr. Noorziah Mohd Salleh et al., lecturer at the Faculty of Business and Management, UiTM (my alma mater). Dr Noorziah et al. wrote that while “low skill and low productivity work with tough working conditions and limited career development opportunities” are aplenty, these jobs do not appeal to graduates. “The low level of work-readiness among Malaysian graduates” is an issue that has yet to be resolved.

Ok the doctors in universities like to use hard to understand language. Let’s break it down. First, most work that is available are those with low skill, low productivity, tough working environment and with limited career growth. Basically it’s a tough job lah. Kerja susah, kerja kucing kurap dan susah nak naik pangkat, pastu gaji ciput. These types of jobs are not preferred by these graduates. And these jobs are filled with foreign workers.

This is what the government needs to tackle. Creation of high-skilled jobs. Not the creation of low level jobs that doesn’t give the satisfaction in the workers mind. I’m talking about job satisfaction, not monetary satisfaction. Take a look this statement by BNM in their report on the question of the workers paid fairly?

Evidence suggests that the lack of high-skilled job creation could have played an integral role in this. Between 2010 and 2017, the number of diploma and degree holders in the labour force increased by an average of 173,457 persons per annum, much higher than the net employment gains in high-skilled jobs of 98,514 persons per annum.

Apparently our economy are not generating enough high-skilled jobs to fulfil the demand of these graduates. Looks like the Good Doctor is right again. I still remember in the big hall of ITM back in 1999. I was among the people who are in the hall when Dr. Mahathir announced ITM will be given university status and the name changed to UiTM. In Dr. Mahathir’s speech, he mentioned that we have too many universities and we are producing way too many graduates who thinks they should be leaders. Dr. Mahathir said we may end up with too many ship captains without their ships and without their trusty sailors. It looks like this turned out to be true. We have way too many ship captains available and yet not enough ships in this economy now. And these captain wannabes want to be a captain and nothing else. Or, they can be sailors but with a captain’s salary, more on this soon.

These there are the problems causing the high unemployment among our youth. First, they can’t speak nor write in English. Second, we don’t have enough high-skilled jobs in the economy. I’ve been in the business of hiring youth the last 18 years, and I can confirm the above two facts are the truth. They are mostly Malays, we can’t deny that these are mostly Malays.

Don’t start telling me about many of our Malay brethren works delivering for foodpanda or Grabfood. These are high paying, low skills, low complexity jobs. Get that, kerja senang, gaji tinggi tapi takdak future. I have talked to numerous foodpanda and grab riders. They can get anywhere between RM750 to RM1250 weekly, yes weekly. They even told me, “I will do this for a few years to save enough money to (get married, buy a house, buy a car, etc) and then I quit. I don’t think this job has a future”. They know this is a dead end and low skilled job and yet they still do it because the pay is good. Low skills, no career growth and high pay. I have friends who quit their 9-5 job that have a decent pay but with tremendous career growth and yet quit and joined grab. They prefer big and quick money for a quick and easy job. Remember when I said our graduates don’t mind being sailors as long as they get paid like a captain? Yup, and did you recently hear someone, somewhere said the Malays are lazy? Kerja senang, nak duit banyak dan cepat. This also reminds me of the Marshmallow Experiment. Wants everything now and not later. Ah, I digress again. It’s not about the Rakyat, it’s about the 2020 budget and the government. We talk about the Rakyat in some other posts.

That’s is a nice looking jar of marshmallows. Go read up on Marshmallow Experiment. I’m failing this miserably with my kids. They seems to want everything now! Just like my bosses!

And since we are on the subject of grab and foodpanda, we have our Youth and Sports Minister, Syed Saddiq, working hard to bring in GoJek. It looks as if he’s giving Gojek preferential treatment with special meetings and some behind the scenes time. This is another short sighted views of the whole matter. We need to create high-skilled jobs, not more low skilled jobs. Our BNM reports said so Tuan Syed. Then he’s also meddling in this foodpanda vs the workers situation. If this is not paving gold plated red carpet for GoJek, I’m not sure what is. Here’s a new and young minister with a new face and no baggage of owing to corporations for money and whatnot, so don’t start going down the road of kowtow-ing to corporations lobbyist. Just be fair to all businesses, make it easier for businesses to thrive. Businesses thrives means more job creations. Ahhh, I digress again! The point is, high-skilled jobs, not low-skilled jobs. Got that Tuan Syed?

Syed Saddiq being perceived as paving a gold plated road for Gojek to come in. While it’s great for everyone that we break up Grab’s dominance in e-hailing, it must not be seen as the government is giving preferential treatment to GoJek.

Back to the main point, the root cause are skill mismatch issues and not enough high-skilled jobs issue. It’s not a situation of our youth not getting enough salary or the employers not having enough money to employ these youth. It’s so typical of politicians, they think they can solve problems by throwing monies everywhere. And Syed Saddiq smiles and looked so proud and can see his mouth saying jobs, jobs, jobs. Let me tell you mr Dear Syed, this won’t solve the problems. Giving free money to the Rakyat and companies wont’s solve the root cause of the problems. As much as you hated BN last time or giving out free money in the form of BR1M, you are doing the same thing here.

My beef is the budget didn’t touch enough on creating more high-skilled jobs, working with universities to have better courses and produce better graduates that have good english communication skills. Let’s hope the longer term 12th Malaysia Plan will touch more on this and makes it the central theme.

So there you have it folks, two issues I have serious beef with. PART 1 on minimum wage, Part 2 on Malaysian@Work initiative. See you in the next budget. 

Peace be unto all.

You Need A Budget Part 1

I’ve penned two things I have a beef about in the 2020 budget.

I just downloaded THIS app to start managing my monies better. It’s pretty unique and good actually. I have a few goals for next few years and I’d like to achieve them all. Let’s hope this app can help me achieve these goals.

Since we are on the subject of budget, I am a bit torn with a few items in the recently concluded 2020 budget tabling by LGE our Finance Minister. 

LGE presenting the 2020 Budget in Parliament

Overall, I feel it’s a populist budget. Most people get something from the 2020 budget. It’s for the masses. Middle income get some, B40 gets the most, and everybody is happy now that the rich are taxed more. Be it only 2000+ of the filthy rich folks impacted, it will still make a good headline for the masses to feel good about it. A populist budget means the government wanted the Rakyat to feel good about the administration. The Rakyat has been feeling anxious and unhappy with the performance of the administration the last year or so. This populist budget will probably get the administration a few points up, in the approval rating. 

I’m feeling pretty good about many of the stuff that was announced. Some of the opposition politicians said the budget had nothing significantly new. Many of the initiatives are carried over from BN era apparently. Well to that I say, why fix it if there’s nothing wrong. PH main beef was with Najib, many other policies have proved to be successful, so continue lah. It’ll be stupid to change something that’s working well. Just change what’s not working well and that’s Datuk Seri Najib and his cohorts.

So to keep up with the spirit of typical Malaysians, whom does not comments on good things, and just comments super hard on the not so good things, let’s get the ball rolling. 

First up, the Minimum Wage. Government will increase the minimum wage to RM1200 for select major city. I’m going to assume major cities will be Klang Valley, Penang and JB. 

Let me get this out first, I believe we should have less government intervention and more market forces decided on things. I agree that there should be government intervention, but it needs to be kept at a minimum. 

So, when the government announced higher minimum wage, I’m not a happy camper. We are just buying time to satiate the rakyat with easy money without increased productivity. Market forces dictate that one should only pay when one gets the value that one wants. In the case of minimum wage, the employers get the same output/productivity but it costs more now. That is not economically viable and against the law of economics. Market will eventually correct itself.

LGE tabling the budget, statingmMinimum wage has been increased to RM1200 starting next year in major cities.

Imagining running a business and you get this increased costs out of nowhere but productivity remained the same. How will the business compensate to the increased costs? Increase the price! That’s the easiest. It’ll be easier since the market now have surplus of money due to the increase in minimum wage.

Very quickly, the market will adjust to the increase in costs with an increase in price. Give it 3-6 months to adjust, probably by April or June of 2020. The Rakyat’s buying power will then be back to where it was before. The rakyat will not get intended increased buying power and the business will then get back their normal profit levels. But prices of goods and services have since increased. 

Another unintended impact of higher minimum wage is automation. Look at some of the places in the world where minimum wages has become so high that businesses can no longer afford to hire minimum wage worker. The businesses resorted to automation. Robots instead of chefs/cooks to cook the food, drones to send the pizzas instead of riders. Conveyor belts and robot arms to pack stuff at the warehouse instead of packing worker. Robots vacuum cleaner to clean up the floors at offices instead of your typical auntie cleaner. These are minimum wage jobs with minimum wage tasks. 

Here are some examples we have in KL, look at many McDonald’s outlets we have around the city. They now have ordering kiosks, some outlets have three of them installed and some have up to 5 kiosks. Who are these kiosk replacing? Yup, minimum wage cashier. Now we only see one cashier manning the counter. 

Another example, Pump attendant, back in the 90’s we have pump attendant. Nowadays with cashless payments and automated pump, we no longer need the minimum wage pump attendant workers. 

In the more developed countries, we have ROBOTS FLIPPING BURGERS! Take a read in that article and see for your self a robot flipping burger patties.

That is Flippy, a robot flipping burgers in California.

Let’s take a look at San Francisco, California. Here, the minimum wage is a whopping USD12 per hour. How much money is USD12 per hour? Let’s do the Big Mac meal set comparison. A Big Mac meal set in Bay Area, SF, is USD5.99. Working for an hour there can get you 2 Big Macs meals. So, working for an hour will get you 2 meals for the day. 

Let’s do the same calculation in KL. RM1200 a month is about RM5.77 per hour. A Big Mac meal set in KL costs RM14.95. You need to work for 2.6 hours before you can get a single meal. 

Comparing San Francisco Bay Area and Kuala Lumpur, the minimum wage if California is super duper high lah, we can say that kan. That is why my friends, they have robots flipping burgers. These robots cost less than a human being, at USD60K per robot, the cost is the same as 20 months of minimum wage salary + some benefits of probably valued at about 20% of the salary. Benefits like annual leave, hospitalisation and medical, EPF and etc. 

This means after 20 months, the robots now works for free. Robot don’t do mistakes, they cook perfectly, they don’t complaint, they don’t take breaks, they don’t ask for 15 minutes solat break twice a day on top of the 1 hour break. Best of all, robots don’t get sick as often and don’t go on annual or maternity leave. 

Have you ever had Costa Coffee brewed by the robots in those Shell Select Petrol Stations? They taste the same almost every time you get them right? Compared to Starbucks sometime too sweet, sometime too bland and sometimes the Frappuccino ice is too chunky and sometimes not. Some of you argued that you need human to interact and whatever lah, when was the last time you spoke to the baristas brewing your coffee? While using the McDonald’s kiosk and did not even miss the human cashier you had interacted back in the days. In fact, you are glad that you had the kiosk because it’s way faster than having a newbie cashier taking you orders oh-so-slowly and sometimes with errors. 

I might be talking too much into the future but sometimes we forget that the future is not that far off. Look at that family picture you have in your purse or wallet or on your office table, yeah, it’s been more than 10 years since you got married. Time flies.

Alright, let’s take a look at the second not so good things about the 2020 budget. Let’s take a look at it in a separate article I’ll post tomorrow. I feel this is getting too long already. I need to write shorter articles and get to the point faster. Lots of my readers only skimmed through the articles and they feel it’s too long. If you managed to read up till this paragraph, give yourselves a pat on the back and give a comment on what you think below or on my FB/Twitter/LinkedIn page and I’ll send you Domino’s Pizza discount codes as a token of my appreciation. I got a few extra and these have expiry dates and limited quantities. Be fast yah.

Peace be unto all.

p/s: If you have time, read up on what Andrew Yang, the next presidential candidate for USA have to say about automation industry.