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Book Title

Labour Market Competitive Index A Call for Action. A Winner – Take – All Paradigm


The World Economic Forum (WEF) defines competitiveness as “the set of institutions, policies and factors that determine the level of productivity of a country”. The level of productivity, in turn, sets the level of prosperity that can be reached by an economy. The productivity level also determines the rates of return obtained by investments in an economy, which in turn are the fundamental drivers of its growth rates. A competitiveness agenda must also be focused on labour market that represents a clear, multi-faceted set of long-term labour market direction that tied together with economic objectives. This is the best means to ensure policy makers remain focused on the overarching goals of competitiveness, efficiency and productivity.

The report aims to enhance the understanding of the labour market competitiveness in Malaysia by developing a Labour Market Competitiveness Index (LMCI). This index composed of various indicators categorized into three main components: supply-side, demand-side, and efficiency. These indicators are important in assessing the quality and quantity of labour available in the market, providing insights into the state of the labour market and the demand for specific skills and qualifications and assessing the effectiveness of the labour market policies.

There are 44 number of indicators have been identified to represent LMCI for Malaysia each of which are assigned to 3 main pillars, and 8 sub-pillars before ends up as a single LMCI for a respective year. The LMCI presented in the report is compared to the overall labour market performance in the established competitiveness publications for a relative comparison. It is found a close approximation to Global Competitiveness Report published by the WEF, indication a robust estimated index score.

Moving forward, the LMCI is useful for the policy makers to improve labour market competitiveness. There are four recommendations made for this report, where the policy makers shall (i) utilise and enhance the LMCI for formulating effective labour market policy; (ii) integrate the LMCI with other macroeconomic modelling for advanced quantitative measures; (iii) incorporate the LMCI into the labour market information infrastructure and; (iv) foster agile policy for improving labour market competitiveness. However, further improvements can be considered for future works such as including localised survey-based indicators, devising labour market institutional quality indicators, incorporating administrative data, and improving technical aspect of the index computation.

For further information on the report, please email

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