Brain Drain in Numbers

This article first appeared in our June 2014 issue.
In celebration of our 10th anniversary, we put together for you in this issue some of our most memorable articles.

We provide you the stark figures on the brain drain phenomenon that is going on in Malaysia.

Compared to average wages in Singapore, the UK and Australia, Malaysia’s wages are lagging far behind. A person of managerial rank in Malaysia, for example, earns only one-third of the wages in Singapore. Interestingly, for high-skilled occupations (e.g. managers, professionals and technicians), wages in Singapore are higher than those in the UK and Australia, especially for managerial level occupations and professionals. However, the opposite is true for medium- to low-skilled jobs.

Malaysia is still very much a country with low labour costs. Elementary occupations (e.g. cleaners, domestic helpers and agriculture labourers) pay only US$5,380 a year – half the wage in Singapore and a quarter of those in OECD countries. Australia, for instance, pays elementary workers US$21,430. Although low wages is one of the main factors of high-skilled emigration, it is not always a disadvantage; multinational companies, especially those in the E&E sector, set up factories in Malaysia because of the availability of highly educated workers at relatively low wages. This has led to rapid development in the E&E sector and has solidified Malaysia’s status as one of the major exporters of electronic goods.

While local workers are rather evenly distributed throughout major occupation groups, the same cannot be said for immigrants. The top four tiers of major occupations in Table 1 are considered to be high-skilled. However, only 4.8% or 70,400 of foreigners occupy these jobs. 57.8% of immigrants work in factory and elementary occupations, compared to 19.4% of locals. The majority of Malaysians work in medium- to low-skilled jobs (e.g. sales and service, clerical work, professionals).

In the past, low-skilled labourers have helped Malaysia develop its construction, manufacturing and agricultural sectors throughout the years, but high-skilled workers are still required to bridge the technology gap between Malaysia and its competitors. In 2012, a total of 295,000 high-skilled, tertiary-level educated Malaysians left for foreign countries. Unfortunately, the number of high-skilled foreigners was unable to compensate for the outflow of human capital. Little has changed since then, and Malaysia is still facing a high net outflow of talent.

Migrants in Malaysia are typically low educated. 46.1% have primary education, whereas only 40% have secondary education. Very few are tertiary educated – a mere five per cent. In contrast, the majority of locals have secondary education or higher. Nearly a third are tertiary educated, whereas only 14% have up to primary education or no formal education at all.

According to the World Bank (2011), share of citizens with tertiary education level rose significantly from 16% in 2001 to 22% in 2008. However, share of citizens with higher skill occupations only increased slightly from 18.4% to 19.9% during the same period. This shows that the growth of high-skilled jobs has not matched the growth of tertiary education, and that the growth of domestic employment demand is insufficient to absorb people with higher education.

Malaysians living in Singapore remit on average US$2,289 per person annually – almost thrice what their counterparts in OECD countries usually remit. Migrants in India remit the least, with each Malaysian sending home only US$474 per year. Remittances per capita from Singapore are much higher possibly due to Malaysians migrating for work reasons to support their families, who rely more heavily on remittances as an important source of income thus creating a need for emigrants to remit more in absolute terms. These data do not differentiate between high-skilled and low-skilled Malaysian emigrants, though it is likely that there is a difference in remitting patterns for both groups.

Sixty-four per cent of Malaysia’s brain drain population is concentrated in the top three major occupation groups which require high skills and qualifications. The majority of high-skill emigrants work as professionals (e.g. lawyers, accountants and pharmacists), whereas the second largest group consists of technicians and associate professionals (e.g. nurses, trade brokers and estate agents).

Approximately 15% of high-skilled emigrants from Malaysia are overqualified for their job positions. Eleven per cent of them work in middle skill occupations such as clerks, service, shop, market sales workers; whilst four per cent of them are involved in low-skilled jobs such as elementary occupations, plant, machine operators, assemblers, and craft and related trade workers. The remaining 11% of the high-skilled emigrants not shown here are unemploye

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