Globalisation and Labour Demand in the Malayasian Manufacturing Sector

Abstract

The intensity of globalisation can be measured through the indicators of export-import to Gross Domestic Product (GDP) ratio, inflow and outflow of foreign direct investment (FDI), investment portfolio and payment made for transfer of technology. The current scenario indicates that the industrial activities have undergone major changes caused by globalisation through progress in communication and information technology (ICT). Consumption of modern technology and rapid changes in the production process from being labour- intensive to capital- intensive has contributed to several issues in labour market. This situation has brought about changes in the composition of the competent labour and increase in demand for skilled labour. This article has the objective to analyse the impact of globalisation on demand for skilled labour, namely, professional and management; and technical and supervisory in the manufacturing sector in Malaysia. Analysis is based on panel data from the Industrial Manufacturing Survey data collected by the Department of Statistics, Malaysia of 1985-2008. Analysis is done on the entire manufacturing sector and six subsectors, namely, manufacturing of sieved petroleum products; manufacturing of valves and electronic tubes and other electronic components; production, processing and preserved meat, fish, fruits, vegetables, oil and fats, manufacturing office equipment, accounting tools and calculators; manufacturing basic chemicals; and manufacturing basic iron based and metal products. Findings of the study demonstrate that FDI has positive and significant impact on the demand for both categories of labour, nonetheless, the economic openness and the number of technological agreements have negative impact.

Keywords: globalisation, labour demand, professional and management labour, technical and supervisory labour, manufacturing sector