Prepared by Nur Sakinah Alzian
26 May 2023
An overlooked and significant untapped resource is the female population. Despite comprising over half of Malaysia's population, the female labor force participation rate remains alarmingly low. The labor force participation rate is an estimation of the active workforce, encompassing individuals aged 16 to 64 who are employed or actively seeking employment. In 2020, Malaysia's female labor force participation rate stood at 55.3%, positioning it among the lowest in ASEAN. Neighbouring countries like Vietnam had a rate of 71.8% of women participating in their workforce while Singapore boasted a rate of 70% and Thailand at 66.6%(1).
Furthermore, there has been a decline in the number of women in managerial positions, dropping from 24.8% in 2020 to 24.1% in 2021(2). The already low number of women in managerial positions becomes even more concerning when it decreases further.
Addressing this issue, the Women, Family, and Community Development Minister, Datuk Seri Nancy Shukri, expressed the government's aspiration to increase the female labor participation rate to 59% by 2025 which was outlined in the 11th and 12th Malaysia Plan(3). Despite witnessing a 25% rise in female participation rate over the past decade, Malaysia's current level of female workforce engagement still lags behind neighboring countries that have undergone similar development trajectories(4). This suggests that there is huge room for improvement in Malaysia's efforts to enhance female workforce engagement and bridge the gap with regional counterparts.
Shortcomings in existing policies and political commitments
Malaysia has demonstrated its commitment to empowering women in the workforce, as evidenced by recent significant amendments to the Malaysia Employment Act through the Employment (Amendment Bill) 2021. These amendments have introduced notable changes, including an increase in paid maternity leave from 60 days to 98 days, fulfilling a promise that the government had made since 2017(5). However, it is important to note that even with this increase, Malaysia's maternity leave duration remains lower than that of neighboring countries. For instance, Singapore provides 112 days of maternity leave, while Vietnam offers 182 days.
Exploiting loopholes
Moreover, the amended legislation also provides protection for pregnant employees by prohibiting their termination. This measure aims to safeguard the rights and interests of female employees during pregnancy and allow them to return to the workforce. However, a year after the implementation of these amendments, a study on corporations, industry organizations, and entrepreneurs has revealed a concerning trend; more men are being hired as women are granted longer maternity leave. The survey findings indicate that 41.3% of the surveyed business individuals stated that they were inclined to hire more male employees(6). This emerging pattern of favoring male hires due to longer maternity leave duration raises questions about the government's commitment to increasing female participation in the workforce. While the extension of maternity leave seeks to support working mothers, the unintended consequence of potential discrimination in hiring practices warrants attention.
The government must recognize the importance of considering a holistic understanding when implementing policy changes. This includes anticipating and addressing how businesses will respond to such changes, as well as assessing their financial capacity to support additional maternity leave. While the extension of maternity leave is a crucial step towards supporting working mothers, it is essential to take into account the potential impact on businesses, particularly in terms of costs. Understanding the financial implications of longer maternity leave and exploring viable solutions to mitigate any potential burden on employers is vital.
Subsidies
The Malaysian government also provides a subsidy of RM180 per child under the age of 4 to civil servants earning less than RM5,000 per month. This subsidy covers both workplace or community-operated nurseries and registered private nurseries, benefiting parents from the public and private sectors. The eligibility criteria for this subsidy include urban households with a per capita monthly income below RM800 and rural households with a per capita income below RM500(7). However, it is important to note that this subsidy fails to account for the rising cost of living in the economy. In Kuala Lumpur, child care center costs are no less than RM450 per month(8). A comparison can be made with Singapore, where parents with Singapore Citizen children enrolled in licensed childcare centers can receive a basic subsidy of up to $600 per month for full-day infant care, and up to $300 per month for full-day childcare(9).
Additionally, a handful of childcare centers are urging the government to review the subsidy as they face difficulties in managing current operational costs, particularly with the implementation of the government-mandated minimum wage of RM1500. The rise in labor costs further strains the finances of childcare centers, making it challenging for them to sustain operations while delivering quality care and education(10). Hence, a comprehensive approach is necessary when introducing policy changes to support women's empowerment and alleviate their childcare burdens. The government should continuously reassess the policy's relevance and consider the interests of all stakeholders affected by it to ensure its long-term success.
Addressing the unintended consequences
Overall, Malaysia's female labor force participation rate remains a significant challenge despite the country's efforts to empower women in the workforce. While recent amendments to the Malaysia Employment Act, such as an increase in paid maternity leave and protection for pregnant employees, demonstrate the government's commitment to supporting working mothers, unintended consequences like hiring bias have emerged. To address these issues, a comprehensive approach to policy changes is crucial.
This includes anticipating business responses and assessing financial capacities. While longer maternity leave is essential, understanding its potential cost implications for businesses and exploring solutions to mitigate the burden on employers is necessary. Additionally, the childcare subsidy provided by the government should account for the rising cost of living, ensuring that it adequately supports working parents. To achieve the government's aspiration of a 59% female labor force participation rate by 2025, a collaborative effort is required. By prioritizing comprehensive strategies and addressing the needs of all stakeholders, Malaysia can pave the way for a more inclusive and equitable future.
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(1) Prime Minister’s Department. Twelfth Malaysia Plan 2021-2025: A Prosperous, Inclusive, Sustainable Malaysia.
(2) “Workbook: Goal 5,” Dosm.gov.my, 2023, https://tableau.dosm.gov.my/t/SDG/views/Goal5_15832029946420/Goal5%3Aembed=y&%3AisGuestRedirectFromVizportal=y.
(3) The Star Online, “Fighting Stereotypes in the Workplace,” The Star, May 15, 2023, https://www.thestar.com.my/news/nation/2023/05/16/fighting-stereotypes-in-the-workplace .
(4) World Bank Open Data. ‘World Bank Open Data’. Accessed 24 May 2023. https://data.worldbank.org.
(5) Malaysiakini Team, “Complying with the Employment (Amendment) Act 2022 in the Year 2023,” Malaysiakini (Malaysiakini, December 28, 2022), https://www.malaysiakini.com/announcement/649556.
(6) FMT Reporters, “‘More Men Being Hired’ as Women Get Longer Maternity Leave,” Free Malaysia Today (FMT) (Free Malaysia Today (FMT), February 20, 2023), https://www.freemalaysiatoday.com/category/nation/2023/02/20/more-men-being-hired-as-women-get-longer-maternity-leave/.
(7) The Star Online, “Subsidy of RM180 for Public Sector Childcare Centre Fee,” The Star, March 25, 2012, https://www.thestar.com.my/news/nation/2012/03/26/subsidy-of-rm180-for-public-sector-childcare-centre-fee.
(8) Adie Zulkifli and Mukhsein Mukhtar, “Expand Childcare Subsidies to Reflect Rising Costs, Says Group,” NST Online (New Straits Times, July 13, 2022), https://www.nst.com.my/news/nation/2022/07/812936/expand-childcare-subsidies-reflect-rising-costs-says-group.
(9) “Subsidies for Preschool,” MadeForFamilies, 2023, https://www.madeforfamilies.gov.sg/support-measures/raising-your-child/preschool/subsidies-for-preschool#:~:text=Childcare%20and%20Infant%20Care%20Programmes,month%20for%20full%2Dday%20childcare.
(10) By Shazwan Mustafa Kamal, “Report: Childcare Centres to Cost More next Year,” Malay Mail (Malay Mail, December 28, 2018), https://www.malaymail.com/news/malaysia/2018/12/28/report-childcare-centres-to-cost-more-next-year/1706925.
Nur Sakinah Alzian is a research fellow at Social and Economic Research Initiative (SERI). SERI is a non-partisan think-tank dedicated to the promotion of evidence-based policies that address issues of inequality. Visit www.seri.my or email hello@seri.my for more information.