RIGHT TRAINING CAN BOOST SMEs
Expanded Act will allow more small companies to take part, says HRDF
TO keep pace with the rapidly evolving technology and expanding job functions, the local labour force has to be regularly trained and equipped with the required skills sets.
While large companies with deeper pockets might find it easier to do these, it may not be the case for small and medium enterprises (SMEs).
“Training is expensive,” Human Resources Development Fund (HRDF) chief executive Datuk C.M. Vignaesvaran said.
He believed that SMEs’ contribution to the economy could be strengthened with better access to training.
Vignaesvaran hoped to extend training opportunities to more SMEs with the expansion of the Pembangunan Sumber Manusia Bhd (PSMB) Act, which will take effect on April 1.
The Act will then streamline its eligibility criteria to Malaysian employers across 19 new sub-sectors within the manufacturing, services, and mining and quarrying sectors that employ a minimum of 10 local employees.
These included the food and beverage and hypermarket, supermarket and department store sub-sectors.
Companies from these sub-sectors with five to nine local employees may voluntarily register with HRDF.
“This expansion is important,” said Vignaesvaran.
It will enable more SMEs to come under the umbrella of HRDF in order for the agency to effectively help small businesses with their training needs.
Governed by the PSMB Act 2001, HRDF has evolved from its initial role as a fund manager for its sizeable training fund into a one-stop centre to provide innovative human resource development solutions to the critical mass of Malaysian SMEs.
The expansion is expected to increase the number of employees eligible for training under HRDF from the current 1.77 million to 2.8 million by year 2020, a rise of 58%.
This is a crucial step towards the overall development of Malaysia’s human capital by increasing the number of skilled local workers from the current 31% to 35% by 2020 as outlined in the Eleventh Malaysia Plan (2016-2020).
Affected employers will have to pay the Human Resource Development a levy of 1% of their total wages on each of its local employees.
Notably, many of the SMEs evade registering with the HRDF because of the levy, which they have to pay to the agency.
“At the end of the day, the 1% levy that SMEs pay adds up to a very small amount, which won’t cover much of their training costs,” Vignaesvaran said.
“But once they are registered with us, it enables us to help them with their financial constraints and training planning.”
Last year, HRDF established its pool fund to assist SME employers who have insufficient levy payment balance to continuously train and upgrade the skills of their employees.
“So, we are taking government funds that have been allocated to us and the retained earnings we have in HRDF’s pool fund to pump it back to SMEs to help them with training.
“And since we are doing a lot of programmes for SMEs, we want to now cover more SMEs.
“They must be registered with us and they must pay the 1% levy to us. If not, we can’t help them.
“So, we are trying to increase the coverage of the PSMB Act for us to help more people,” he added.
SMEs are known to be one of the core pillars of the country’s economy, making up 36% of Malaysia’s gross domestic product (GDP) and providing 65% of the country’s employment.
Some 14,000 of the 18,000 compa- nies registered with HRDF are SMEs, but Vignaesvaran stressed that this was only a small fraction of the over 400,000 SMEs established in Malaysia.
“When we have a global economic problem, countries with higher SME contribution are stronger,” Vignaesvaran pointed out.
“For Malaysia, it is still low. The only way to push for a higher SME contribution is through training.
“Currently, almost 65% of Malaysians don’t have access to a structured training budget.
“Most of the time, they will take out the cost of training from their own money or they don’t train at all.
“A lot of people are being left out of training because they don’t have the budget,” he added.
HRDF will also look into the next phase of the expansion of the PSMB Act, which Vignaesvaran said was aimed at encouraging all employers to register with the HRDF. This may be rolled out next year.
Over the years, Vignaesvaran said HRDF found that companies that were registered with the agency saw a significant improvement in their productivity, thanks to the various certification and development programmes approved by the fund.
These programmes corresponded with the advancement of technology, system and processes as well as supported the agenda of the nation to enhance the country’s economic development, he added.
Vignaesvaran noted that previous claims from the fund were largely for companies’ team building initiatives instead of skills-based training.
Additionally, most of the training that employers utilised were without certification.
“So, as a staff member going for training, all I get is a certificate of attendance,” Vignaesvaran said.
“If I’m going to upgrade myself, this is useless.
“If we are not equipped and we don’t train our staff, we will become obsolete.
“Taiwan has a practice of multi-skilling their employees. They don’t just train you in one thing.
“So, when there is a movement of one technology to another technology, you can move seamlessly,” he added.
Vignaesvaran acknowledged that many employers were sceptical about HRDF’s efforts and its pool fund.
However, there are also employers who have seen its benefits.
HRDF is working with industry associations to increase awareness among employers, particularly SMEs, to invest in training their staff.
“If we want to become a developed and high-income nation, we need to be trained.
“And, we need to create opportunities for people to upgrade themselves.
“We want to train for the future. For that, we need companies to be registered with us,” he added.
“We hope this exercise will benefit SMEs.”