IN today's environment of rising home prices, is it more advantageous to buy a house or rent a house?
While most people unanimously agree that owning a home is better, the financial situation of the individual is important in assessing whether he or she can afford the home.
“Of course, it's better to buy than rent as the loan you pay to the bank is equivalent to the rental you are forking out,” says the boss of the property consultant firm.
James Wong ... ‘It’s better to buy than rent as the loan you pay to the bank is equivalent to the rental you are forking out.’
Young people are advised to look into their finances and ensure their existing debt ratios are not too high before buying a house. They also need to consider the stability of their jobs to ensure they will be able to make the monthly loan instalments, Wong says.
“If a person's debt ratio in relation to his salary is already close to 50%, chances are banks will not qualify the loan. If a person's salary is too low, meaning that the mortgage amount to be paid is more than 50% of a person's salary, the bank may also hesitate and require more documentation to approve the loan.
“These days, with the easy payment packages by banks and the ability to withdraw from one's Employees Provident Fund (EPF) savings, owning a house has become more affordable,” says Wong.
Certainly, potential house buyers can now tap on their EPF account 2 to purchase a property. First-time house buyers can still qualify for loans of up to 90%
During Budget 2011, the Government said it will introduce Skim Rumah Pertamaku through Cagamas Bhd, which will provide a guarantee on the downpayment of 10% for houses below RM220,000.
This scheme is for first-time house buyers with household income of less than RM3,000 per month. In other words, the buyers will obtain a 100% loan without having to pay the 10% downpayment.
First-time house buyers will also be given a stamp duty exemption of 50% on instruments of transfer on house prices not exceeding RM350,000. The Government also proposed that a stamp duty exemption of 50% be given on loan agreement instruments to finance such first-time purchase of houses.
“If you rent a home, especially in today's environment of rising prices, you will never benefit from the increase of the property value. Furthermore, even if the value of the home does not increase over time, the mortgage balance decreases and equity builds,” says another property consultant.
“With the problem of inflation creeping up, the more you delay buying a house, the more expensive it becomes over time. Buying property is one way to fight inflation,” he adds.
In terms of disadvantages in owning a house, there are many variable costs involved, for example the house assessment, service or maintenance fees and fire insurance among others.
“Selling the house may also not be as quick as, say, selling your investments in shares. The whole process of selling, along with documentation by lawyers can take up to a year, depending on the location of the home. If there is already a potential house buyer, the process can be sped up to 3 months,” says the property consultant.
If a typical middle class 2-storey terrace house in Kuala Lumpur is RM400,000 and the rent is RM1,500 a month, the nett yield is RM3.8%.
“This is a reasonable return from such a landed property,” he says.
Assuming that the household income is about RM7,000 a month, this means that the ratio of the household income per annum to the house price is 4.76 times.
“To buy this house based on 90% financing at a fixed interest loan for 30 years, you would have to pay a 5% interest, which means a monthly expense of about RM1,900 a month. At this point of the exercise, it is clearly better to rent than buy,” he elaborates.
Still, he adds: “This analysis is based on what I consider the typical housing unit. Different considerations may apply for different types of housing units in different areas.”
Another powerful motivation in favour of buying rather than renting is the social imperative to own a home.
“Owning a house also allows you to raise credit as and when it is needed, for family expenses and for business purposes, and this is a powerful motivation for ownership,” says Fernandez.
AT Harvard, I really enjoyed graduate macroeconomics taught by Nobel laureate Prof W. Leonfief and Prof Martin Feldstein. In particular, the philosophies underlying different policy approaches by Keynes, Hayek and Friedman. Simply put, Hayek (the Austrian school ascendant in the 19th and early 20th centuries) promoted the idea that private sector should be left free to find its own balance in a downturn.
The markets' resulting purging power served the United States well in the 19th century when the economy emerged stronger after each recession. But, it was later taken too far in the mix of tight money and high taxes that led finally to the Great Depression. That's when the Keynesian idea of fiscal stimulus took root.
In October 1932, Keynes made the case that depressions are caused by a spending deficit which can only be made up by government spending. Because of “a lack of confidence”, there is no assurance excess funds “will find its way into investment in new capital construction by public or private concerns.” With global recession, the consensus made us all Keynesians resorting to heavy government spending to resuscitate the economy was the answer to severe downturns. First cracks appeared with the outbreak of the fiscal crisis in Greece early in 2010. Critics argued government spending brought-in diminishing returns, producing an anaemic (jobless) recovery that benefited mainly special interest groups.
In the United States, Federal Reserve chairman Ben Bernanke stood steadfast and let it be known more stimulus was needed. His monetary activism led to an open-ended commitment to pump as much money into the system as is required to push for maximum employment. He added that he was doing what Friedman would do.
Milton Friedman advocated that the Great Depression was largely the result of a major contraction in money supply.
Milton Friedman (father of monetarism) advocated that the Great Depression was largely the result of a major contraction in money supply. And could have been avoided had the Fed held money supply stable. There is now growing backlash against the Fed's new approach. As I read it, Keynes would not have supported big deficits during boom times, such as those that led eventually to the 2007/'08 crisis. Similarly, Friedman is unlikely to have backed the Fed's monetary activism in engineering economic expansion rather than merely cushioning the pain in downturns. So, systematic perversion of Keynes' and Friedman's thoughts has led to their falling out of favour once again.
Confidence
The greatest disagreement between Keynes and Hayek was over benefits of government spending financed by deficits. Keynes pointed out that public interest in a recession cannot rely on private economy went so far as to say: “to spend less money than we should like to do is not patriotic.” But Hayek argued: “The existence of public debt on a large-scale imposes frictions and obstacles to re-adjustment very much greater than that imposed by the existence of private debt.” Simply put, no stimulus is needed. Nevertheless, both agreed this lack of confidence is simply destructive to any weakened economy.
For Keynes, confidence will come by bridging this gap in aggregate demand. “Private economy” was the culprit that impeded a return to prosperity by hoarding savings. That is, the potentially pernicious consequences of an increase in demand for money being not met by a corresponding increase in the supply of money. Even Hayek agreed hoarding is deflationary and “no one thinks deflation is in itself desirable.”
For Hayek, the way forward to building confidence in the face of destructive Smoot Hawley Tariff 30 protectionism, is for governments world-wide, led by the United States, to “abolish all those restrictions on trade and the free movement of capital.” Only expanded trade can rebuild confidence to enable the United States to pay off the public debt.
Growth vs debt
With recovery, albeit anaemic, attention is turned to exit (of stimulus) and fiscal consolidation (bringing down deficits and debt). After more than a decade of good times, the world awakens to face the reality of painful cuts and tax increases which are now needed to restore sanity in public finances, battered by a combination of years of overspending and the effects of global crises.
When recession set in in 2007, advanced nations' budget deficit averaged 1.1% of GDP. By end-2010, this had exceeded 9% according to the IMF, as revenues plummeted and banks got bailed out big time. Government gross debt will exceed 110% by 2015, against 73% of national income in 2007. This global rise in mounting debt will require nations to (i) reduce accumulating debt to bring down debt ratios, and (ii) inject fiscal discipline to reduce deficits. This, the International Monetary Fund warns, means “sizeable and sometimes unprecedented efforts as failing to do so would ultimately weaken the world's long-term growth prospects.”
While this is all well and good, there are fundamental differences in policy on opposite sides of the Atlantic. Germany's finance minister puts it this way: “While US policy makers like to focus on short-term corrective measures, we take the longer view and are, therefore, more preoccupied with the implications of excessive deficits and the dangers of high inflation.”
Last week's Franco-German move to end wage indexation, raise retirement age and lock-in debt limits into national constitutions across the euro-zone is bound to be provoking. In a public lecture, the infamous Soros said: “Something has gone fundamentally wrong in Germany's attitude towards the Economic Union.” By not only insisting on strict fiscal discipline for weaker euro-zone countries but also reducing its own fiscal deficit, Germany was in danger of setting in motion “a downward spiral.” This policy stance ignores a lesson from the 1930s Depression and so is “liable to push Europe into a period of prolonged stagnation or worse. That will in turn generate discontent and social unrest.”
Much of this is already today's reality. President Obama's stance is different but clear: secure a sustainable recovery first, while setting the stage for fiscal consolidation over the near medium-term. Growth is critical to success in reducing budget deficits. The US position is unique in that with US dollar at the heart of the global financial system, it can afford to tighten fiscal policy only when expansion is invigorated. While the US fiscal deficit (10.7% of GDP) is larger than the euro-zone, the Greek and Irish crises have prompted a flight to, rather than from, the US dollar and US bonds. Indeed, there is no market pressure to adjust. So, while the United States recognises it has to seriously tackle problems of fiscal deficit and high debt, there is an unwillingness to act politically.
Is debt too high?
Today's deficits which are leading to ever higher debt and servicing burdens are plainly unsustainable. What level of public debt is appropriate? Conventional wisdom says a safe level in a rich economy is 60% of GDP pitched at the limit enshrined in The Maastricht Treaty which governs membership in the euro. That's before the crisis.
As I see it, there is no empirical evidence to support this limit. Of course, the lower the better since it is unlikely to crowd-out private sector initiative. In the past, this limit was often by-passed anyway. Recent studies by Harvard's Rogoff and Reinhart find that public debt burdens of less than 90% have scant impact on growth; but they see significant impact at higher levels. No one-size fits all.
The United States, with the broadest and deepest bond market and dollar as reserve currency, surely will be able to carry a higher debt than any euro-zone members. In the end, the right level of debt depends on the means used to get there, consistent with growth targets. Evidence shows that cuts in spending are more sustainable and friendlier to growth; whereas, tax increases can harm growth. Taxes that do least harm to growth are on consumption and immobile assets (eg. property). Green taxes also make good sense. But politics often point elsewhere, eg. towards making the rich pay to clean the environment. In UK and US, the highest marginal income tax rates are possibly poised to rise. Good for populists but it will not boost growth.
Debts matter but assets also count
During the Great Depression, Keynes advocated spending “of any kind, private or public, whether on consumption or investment.” The immediate aim was to urgently fill the void in demand. Hayek took exception for it mattered to him the form spending took since “revival of investment was particularly desirable.” Sure, once recovery comes on-stream, it does matter what the spending is on.
Henry Morgenthau, President Roosevelt's Treasury Secretary, advised: “You can do something about the railroads. You can do something about housing. Above all, you must do something to reassure business We want to see private business expand. We believe much of remaining unemployment will disappear as private capital funds are increasingly employed.” History suggests the new respect for market confidence helped in the recovery following a double-dip in 1937-38. A lesson for US Treasury's Geithner those who forget the past condemn us all to repeat it.
Come to think of it, fiscal consolidation is not just about deficits and debt. Depending on how they are incurred, assets are usually created. It is true we should not burden the future with unproductive debt. All societies have infrastructure assets, i.e. transport, energy & water systems. They also have basic education, health, judicial and defence systems. These systems provide a “public good” which are not usually provided by competitive markets.
Surely, it does not make sense slashing infrastructure and utility investments and support for university teaching when borrowing can be had at absurdly low cost. Indeed, never has there been a better time to borrow than now to productively build public assets. Such Keynesianism is worthy of support especially in the face of large unused capacity.
I think it is wrong to insist that solving the problem caused by debt can't be solved by piling more debt. It's wise to look at net debt. Yale Prof Shiller argues there is “an arbitrage opportunity for governments to borrow massively at these low real interest rates, and invest in positive returning projects Unlike private firms, government can count as “economic profits” on their investments with positive externalities (benefits that accrue to everyone). Of course, unsustainable government consumption must be curbed. Borrowing is no sin so long as they create productive assets. Assets created cannot be ignored when looking at debt.
The Keynesian way
I should end on a lighter note. I well recall a fascination with Keynes' lesser known short essay written in 1930: “Economic Possibilities for Our Grandchildren”. While in the thick of the Great Depression, Keynes reminded us that “the long run trend was inexorable growth.” He then went on to predict ... “the standard of life in progressive countries one-hundred years hence will be between four and eight times as high as it is today.” After 80 years, with all the disasters in between, US and Western Europe are already about 5-times richer. And still counting.
In emerging nations, income growth in the past 30 years has been even more impressive. What's of concern is the quality of sort of growth we are after in the end. Keynes acknowledged the insatiable desire of human beings to blindly pursue wealth. Recent events have shown, even with wealth, people still wanted to borrow more than they could repay. In the end, most would adjust, albeit grudgingly, to a life of plenty. It is in this future good life Keynes famously imagined economists could be thought of as “humble, competent people on a level with dentists.” Economists have a way to go yet.
Former banker, Dr Lin is a Harvard-educated economist and a British Chartered Scientist who now spends time writing, teaching and promoting the public interest. Feedback is most welcome; email: starbizweek@thestar.com.my.
PAS is inherently conservative and wants to Islamise daily life. The DAP has to understand and accept that through its rapport and close cooperation with the party, it is helping to advance intolerance and a narrow view of a great religion.
NO MATTER how hard liberals in PAS, a minority in the party, try to limit the damage and paste over the excesses of the conservative majority, the party’s true face keeps surfacing every now and then, severely embarrassing the Pakatan Rakyat coalition whose secular member, the Chinese-majority DAP, is left to carry the brunt of the damage.
From banning alcohol to proposing chopping off hands for theft to hudud laws, it is the DAP that has to scramble to defend, deny, explain or justify the excesses of its ally PAS.
The DAP’s task is made difficult because PAS is unable to rationalise between its desire to Islamise daily life to respecting fundamental liberties and the secular legal foundations of the country.
The latest outburst by PAS Youth leader Nasrudin Hassan Tantawi, 41, to police society on Valentine’s Day has all the top DAP leaders – from adviser Lim Kit Siang to Selangor Speaker Datuk Teng Chang Khim and Dapsy leader Anthony Loke – working overtime to limit the damage, assure the public, refute the claim and criticise Nasrudin, a rising hardliner in PAS.
Nasrudin, who particularly targets Valentine’s Day, a Western practice that is now marked the world over as a day to celebrate affection, is into moral policing in daily life.
He is a leading advocate in PAS and in conservative Islamic circles for a sin-free society through the application of strict Islamic rules.
Nasrudin, elected as PAS Youth leader in 2009, announced on Wednesday that serious measures would be taken to quell “immoral acts” during Valentine’s Day in the Pakatan-ruled states of Kelantan, Kedah, Selangor and Penang.
The crackdown is part of the PAS campaign to instil sin-free living and will include searches and raids by local authorities, police action and distribution of pamphlets on the virtues of Muslim morality.
“We have identified spots in these states which are used by lovers and we are deploying local religious department officials, party members and Rela to stop acts like casual sex, which violates Islam,” Nasrudin reportedly told the AFP news agency which flashed the statement worldwide.
He has since said he was misquoted but his inclination for moral policing is well known.
PAS liberals like Shah Alam MP Khalid Samad, feminist NGO Sisters in Islam and DAP leaders criticised Nasrudin, questioned his credentials and authority to implement the measures and virtually told him to “shut up”.
Khalid and a few others like him are moderate Muslims and liberal in their views on contentious issues like hudud laws, alcohol consumption and moral policing, which are best left to the individual and family to decide.
Such leaders are far and few in PAS. Because the same “morality issues” keep cropping up and from a wide range of PAS leaders, so it cannot be dismissed as the odd behaviour of a few.
In fact, leaders like Khalid are the odd ones, trying and often failing to defend a “moderate” position in a conservative, fundamentalist party like PAS.
One cannot deny that PAS, being a religious party, is inherently conservative and bent on imposing its narrow view on society.
This is what the DAP has to understand and accept, that through its rapport and close cooperation with PAS, it is helping to advance intolerance and a narrow view of a great religion and not the pluralism and multi-culturalism that are the pillars of the “Malaysian Malaysia” concept, the party’s founding philosophy.
It is not enough for DAP leaders to each time deny, reject, justify or assure the public on the excesses of PAS leaders but to engage with PAS and find an acceptable and permanent solution that is consistent with the Federal Constitution.
If a permanent solution is impossible, then the DAP should reappraise its pact with PAS.
Being members of the same political coalition and having a common political agenda and policy framework, they should be able to eliminate ambiguities, offer the rakyat a dependable solution and permanently end the pretence.
Nasrudin, from Kuantan, enjoys a wide following in PAS and outside for his uncompromising views on sin and morality.
He has been consistent in his views from when he was an Islamic student leader in 1992 till now, as the PAS Youth chief.
His early education was in government schools in Felda Keratong but his formative years were at the Maktab Ittibai Sunnah, Negri Sembilan and later at the famous Madrasah Ad-Diniah al-Bakriah, Kelantan.
Married with six children, Nasrudin continued his higher education at the Ma’ahad Fathul Islami and at Al-Azhar University.
He returned to build a reputation as a devoted missionary, strong supporter of madrasah education, blogger and writer on Islamic issues.
Always in a turban, his advocacy makes him a rising star in PAS. As PAS Youth chief, he is member of the party’s Syura Council.
He stood for the Maran parliamentary seat in 2008 but lost to Umno’s Ismail Muttalib by a big margin.
This is not the first time Nasrudin has come under fire for his statements. Last year, he blamed Valentine’s Day and New Year celebrations as among the main causes of baby dumping.
Nasrudin’s background, education, beliefs and strong networking skills make him an ideal PAS leader of the future but in his conservatism, he is the antithesis of Khalid and his moderate philosophy.
The PAS grassroots endorsed Nasrudin, electing him youth chief in 2009 – the year when delegates at the party election in Shah Alam wiped out PAS moderates like Kelantan exco member Datuk Husam Musa, Khalid himself and others, leaving them isolated and fighting a rising conservative tide in PAS best represented by leaders like Nasrudin.
Who doesn't have a relative or friend who has packed up and left Malaysia for “greener” pastures? And who doesn't know of someone who has plans or aspirations to do exactly that? Chances are, most of us do.
It would seem that over the years, the compulsion to leave the country in search of opportunities has grown beyond pure economics. Dissatisfaction over the quality of education, personal safety and for some, the political future of the country where sabre-rattling seems to have become common place have served as push factors for many Malaysians to pack their bags and leave the country.
While it could have been relatively easier to shrug off the consequences of that in the past, it is a “luxury” the country can ill-afford today, in this era of heightened competition where economies are scrambling to woo the best to stay ahead of the game and for many, to survive and prosper.
Malaysia has to retain and attract top talent to climb the global per capita income ladder.
»It is no longer a question of salary but the whole environment «TAN SRI RAMON NAVARATNAM
“We have the right ideas. Unless we implement those fast, we will create a credibility gap,'' says ASLI Centre of Public Policy Studies chairman Tan Sri Ramon Navaratnam, adding that “it is no longer a question of salary but the whole environment from social to the way of life that must be looked at holistically.”
The unique Malaysian worker
There is a commonly held belief that the Malaysian employee is able to assimilate and adapt well to any environment. In this context, environment would mean country. Indeed, that's a valuable trait to possess. That may partly stem from the multi-cultural nature of the Malaysian society which has carved a solid bed for the mingling among different races, religions and cultures.
Another oft-described trait of Malaysians, as highlighted by foreign employers, is that they are smart and hard working and this goes beyond the fact that the country has a large pool of straight-A scorers in public examinations. It has a great deal more to do with the employability of Malaysians.
Hence, every time a Malaysian goes abroad to study, the country faces the threat of them not returning to their country.
But what makes the Malaysian worker unique is also their linguistic capability.
“Malaysian talent is on par with regional and even global talent, especially those who have a good command of English as well as an additional language such as Mandarin or Bahasa Malaysia. Going forward, there is a need to improve the standard of the English Language and the technical competencies of the Malaysian labour force in order to remain competitive,'' says Randstad regional director of Singapore & Malaysia Karin Clarke.
But the country that has benefited the most from migrating Malaysians is Singapore. As Singapore is a high income economy Malaysia aspires to become, the island republic has attracted 300,000 Malaysians, a large number of whom comprise skilled talent.
»700,000 Malaysians are working overseas« MELISSA NORMAN
A mammoth task An agency has now been set up to closely scrutinise this dilemma and fill the gap. Indeed, the newly-set up Talent Corporation Malaysia Bhd appears to have a Herculean task ahead.
The agency is headed by Johan Mahmood Merican and his mandate is to overcome the talent shortage situation in Malaysia. Naturally, sceptics abound as this is not the first time the administration has talked about the need to woo Malaysians from abroad and reverse the brain drain. Instead, over that period, the drain could have become more pronounced.
“We definitely see a wider pool of candidates being more open to looking at what is on offer, particularly in the educated professional fields and the sectors that are most highly in demand (abroad),'' says Clarke.
Sadly for Talent Corp, there is no single magic bullet to stem the tide and grow the talent pool in the country. The weak links are aplenty but fortunately, there is the appeal of promise - that the Government, this time around, has the political will to make the necessary changes, armed with a massive handbook called the Economic Transformation Programme.
According to Johan, Talent Corp has a three-pronged approach - analyse the Malaysian diaspora and see how best they can contribute to nation building, either by coming home or from where they are.
The other is to woo foreign talent and sort out the hurdles of them settling here while the third is to put a lid on the outflow of human capital.
In the process, Talent Corp will need to engage companies and businesses to ascertain what is needed to widen the talent pool and how government policies and procedures can be streamlined towards this end. “We aspire to be a bridge between industry's requirement and the Government,'' says Johan.
Talent Corp started with a launch grant of RM30mil from the Government and Johan feels that its maximum staff strength should be no more than 50. Of course, he has been given a set of key performance indicators to match up to.
“I need to address the talent need and address the gap,” says Johan, who started on this journey on the first day of the new year.
“The bulk of my time has been spent engaging with stakeholders...there are a lot of people in the country who are passionate and knowledgeable. Having a practical knowledge of what's happening in the country and a sense of what needs to be done is important,'' he says.
Up the value chain
At heart of what Talent Corp wants to achieve is fulfilling the labour requirements of the ETP. The ETP is envisaged to create 3.3 million new jobs but many of those jobs are higher skills in nature.
»Malaysian talent is on par with regional and even global talent«KARIN CLARKE
The announcement in January where 35,000 new jobs would be generated from new investments totalling RM67bil shows that labour intensive jobs are on the wane and higher skills are in vogue.
As a country moves up the value chain towards a high income nation, which is what the ETP is meant to do, the type of skills required will be different but the freedom of labour movement, and the lack of soft skills, is causing a lot of problems for employers of high skilled labour.
“Malaysia has a high graduate population. However, many lack the soft skills deemed necessary for many high skilled job placements.
“We hope that the initiation of the Talent Corporation will assist in addressing some of these issues. Human capital is an asset to our economic growth and an importance has to be placed on proactively developing our workforce,” says Norman.
According to Kelly Services, the top five skills in demand are communication skills, problem solving, ability to participate in decision making, people management and strategic thinking.
“Overcoming these skills shortage will include investing in existing talent to ensure that they are well-versed in not only the theoretical knowledge but also the soft skills,'' says Norman.
She says meeting labour demands will depend on the collaboration of different factions.
“High salaries and attractive benefits are not the only factors that will assist in attracting the right talent. As Malaysia has a significant ageing workforce and a growing young population, a multi-generational strategy is crucial,” she adds.
To ensure Malaysian human capital is capable of meeting the standards and demands of the workforce, Norman says educational institutions need to be equipped with the tools and capabilities to teach students relevant in-demand skills while fresh graduates need to be nurtured to ensure they meet the demand of future employers through work placements and internships.
The Talent crunch
Malaysia is a country that's just a nudge away from full employment.
But possessing a university degree is no longer a guarantee for employment as the scrolls are not always relevant to the skills needed.
Kelly Services notes that every year, 250,000 Malaysians complete their studies at higher education institutions locally and overseas.
“There are now about 25 private universities and 20 university colleges in Malaysia, and student enrolment in private higher education institutions has increased by over 54% within a short span of time from 2005 to 2008,'' says Norman.
“As globalisation of work and workers continues, so will the need for higher education institutions to re-examine required skills in the new knowledge-based economy and how they can produce more thinking' students, who are competitive, have the relevant technical and behavioral competencies.”
With competition for skilled IT talent in Malaysia at an all time high, especially in IT outsourcing and shared ervices, there is a shortage in that sector; Malaysia's shared services and outsourcing SSO sector created 32,500 jobs in 2007 and is growing at about 30% per annum and has the potential to hit RM6.4bil by 2012.
The rollout of high speed broadband has provided strong demand for talent in both the cellular and broadband segments in the telecommunications industry. In engineering, new development projects and industrial parks such as the Tanjung Agas Industrial Park, the Northern and Southern corridors have created job opportunities across the country.
“Within the commercial and business sectors, candidates with strength in market research, product and brand knowledge are also in demand,'' says Norman. “These are sectors that face a constant demand for talent with specialised skill-sets and experience.”
Even though more than quarter of a million people graduate from institutions of higher learning annually, Clarke says there is still a huge number of jobs that are not filled.
»At such levels, Singapore is 21% cheaper than Malaysia« SHAMSUDDIN BARDAN
“Latest statistics reveal that there are 100,000 jobs available but no graduate takers,'' she says. The skill crunch is particularly acute in major hubs.
Three most notable markets where skill shortage persists, according to Randstad 2010's World of Work report, are KL, for white collar professionals, Penang for specialists in the semiconductor and manufacturing sectors and Johor Baru, particularly for infrastructure roles, such as healthcare and education.
The low down
Wages are often a strong cause for labour migration. Malaysian Employers Federation executive director Shamsuddin Bardan however, disagrees that wages in Malaysia are too low citing that even a foreign worker, based on MEF estimates, should be earning a take home pay of RM1,500 a month based on the amount of remittances from Malaysia.
Another factor is productivity. Shamsuddin points out that a worker in Singapore is paid 2.5 to three times that of an equivalent skill in Malaysia but their productivity is 3.8 times higher than a Malaysian worker. “At such levels, Singapore is 21% cheaper than Malaysia,'' he notes.
But the relative static pace of wage inflation has been a source of frustration for many, and is high up in the reasons for departure.
Malaysia has yet to experience a significant change in wages and there are numbers to prove it. The country's average annual salary increase has been relatively small at 2% to 6% over the past decade.
The Kelly Employment Outlook and Salary Guide 2010/11 indicated a 4% to 5% increase in salaries across all sectors.
“There are calls to implement a minimum wage system as the Human Resource Ministry revealed that 34% of our workforce earns below the national poverty line of RM720,” she adds.
Clarke points out that wages in Malaysia are reasonably consistent based on individual currencies with other countries in the region but the challenge for Malaysia is that there are countries in the region that have stronger currencies.
“For example, a Malaysia-based Priority banker earns the same in ringgit as a Singapore priority banker earns in Singapore dollars. However the currency conversion would see the Singapore banker earn over double that which they would in Malaysia,'' she says.
That is yet, another factor that could keep Malaysian talents rooted abroad.
The more satisfied people are with their country, the happier they are with their lives, suggests a new study of 128 countries. The connection between national satisfaction and happiness was particularly strong for people with low incomes and those living in poorer nations.
The Gallup organization polled 1,000 people in 128 of the 195 or so countries in the world (There is no global agreement on how many countries there are because of sovereignty disagreements, such as the one between China and Taiwan.) The pollsters asked respondents about their income, job satisfaction, and opinions on their life and country.
The analysis, published in the February issue of the journal Psychological Science, revealed that good feelings about your nation are correlated with a rosy outlook on your personal life. The association was present across the globe, but was strongest in poorer and non-Western nations, said study author Mike Morrison, a doctoral candidate at the University of Illinois at Urbana-Champaign.
"You can hear politicians in any country declare, 'We live in the best country in the world!' and people cheer," Morrison said in a statement. This idealization seems most potent for those who are worse off financially, the study found.
Individuals with low income and those in poor countries may find patriotism appealing as a way of consoling themselves in rough times, Morrison said. People in non-Western countries also tend to be less individualistic than Westerners, so they may get a bigger personal boost from warm feelings about their collective group.
Wealthier and Western respondents linked their happiness more closely with individual factors, including health, job satisfaction and standard of living, than did poorer and non-Western respondents.
The study shows that societal characteristics, not just individual traits, can influence happiness, study co-author Ed Diener, a happiness researcher at the University of Illinois, said in a statement.
"What is more, societal characteristics become even more important to happiness when one's life is not going well," Diener said. "This might explain why nationalism, the loyalty of sports fans, and religiosity can be very strong in the toughest of times."
You can follow LiveScienceSenior Writer Stephanie Pappas on Twitter @sipappas.
James Wong ... ‘It’s better to buy than rent as the loan you pay to the bank is equivalent to the rental you are forking out.’ 
