Banking & Finance

BNM calls for Comprehensive Reform of Employment Sector

Date: 27 March 2019; Type: Legal News; Source: Bernama

KUALA LUMPUR, Mar 27 (Bernama) - Bank Negara Malaysia (BNM) has called for a comprehensive reform of the country’s employment sector to attract quality investments that can generate more high-skilled jobs and offer better salaries. Governor Datuk Nor Shamsiah Mohd Yunus said currently, workers in Malaysia are not paid equitably despite playing a larger role in the production process of labour-intensive industries such as wholesale, retail and food and beverages. She said a research by BNM revealed that if a Malaysian worker produces output worth US$1,000 (US$1 = RM4.06), the worker would be paid US$340 for it, however, the wage received by a worker in benchmark economies for producing the same output would be higher at US$510.8.

"High skills and high-wage job creations are crucial to Malaysia's aspirations towards a high-income economy. Hence, comprehensive reforms are critical in attracting quality investments to generate more high-skilled jobs and workers.

“Beyond that, we need to reduce labour mismatches, improve labour laws and ensure that wages reflect productivity," she told a press conference after the presentation of BNM’s 2018 Financial Stability and Payment Systems Report here today.

Meanwhile, Nor Shamsiah said the central bank expects to complete the review of the Development Financial Institutions (DFI) mandates by this year.

"Work continues to progress in strengthening the capacity of DFIs to effectively contribute to economic growth and social development.

"A key development in 2018 was the implementation of an enhanced performance measurement framework to provide better capture and integrate the developmental impact and financial performance of DFIs," she said.

Nor Shamsiah said the central bank is also engaging with the government to review the DFI landscape to take into account developments in the financial system and changes in Malaysia's economic structure and priorities.

This, she said, would provide a sharper focus in the mandates of DFIs, while optimising performance and synergies.

The central bank is also conducting a study on the introduction of a cash transaction limit, in addition to the reduction of the cash reporting threshold to RM25,000 from RM50,000, which went into effect Jan 1, 2019.

The governor said the study, which aims to address the use of cash in storing, moving and disbursing proceeds from illicit activities, is expected to be completed by the second or the third quarter of this year.

In addition, she said the ongoing review of the Money Services Business Act 2011, currently under public consultation, will further strengthen the ability to crackdown on illegal money services business activities which have also been a way for criminals to move illicit cash proceeds.

Asked whether the United States’ economy is facing a potential recession, Nor Shamsiah said that there has been no indication of it happening in the world's largest economy.

"When you look at the US economy, the labour market is still in full employment, job creation is at an all-time high and still increasing, and (private) consumption drives 70 per cent of economic activities, so how can there be a recession when you have that kind of situation" she added.

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