• As at 2H2023, Malaysia has witnessed a gradual shift in the proportion of women compared to men in the workforce, with females comprising 56.2% of the labour force participation rate, while males constitute 82.8%, indicating that the disparity continues to persist in the Malaysian labour market.

• Bursa Malaysia stands out in the region with 26% of its board seats held by women. Remarkably, 44% of issuers on Bursa have surpassed the 30% threshold for female board participation.

• However, Malaysia reported only 13.5% women's participation in parliament out of 222 parliamentary members, ranking second lowest among the region.

• These disparities underscore entrenched gender inequalities in the labor market, emphasizing the urgent need for Malaysia to address significant challenges in achieving gender equality, notably the underrepresentation of women in the workforce and the persistent gender wage gap, aligned with the Sustainable Development Goal 5: Achieve gender equality and empower all women and girls.

Attaining Gender Parity within Labour Force

The Shared Prosperity Vision 2030 (SPV 2030) is dedicated to fostering sustainable growth and fair distribution in Malaysia, spanning income levels, ethnicities, regions, and supply chains. Its goals include strengthening political stability, boosting prosperity, and fostering unity amidst cultural diversity. SPV 2030 aims to ensure all Malaysians attain a decent standard of living by 2030. In line with principles of equality, specific groups, including women, will receive priority to enhance their socioeconomic status and prevent exclusion. To address women's issues, the government has prioritized gender mainstreaming policies for effective implementation. By promoting gendersensitive policies, women's participation and leadership in both public and private sectors, particularly in top management, are expected to increase, benefiting national development through optimized labour resources and economic growth. Supporting the effort, Women, Family, and Community Development Minister, Nancy Shukri, has recently outlined the government's plan to elevate women's participation in the labor force to 60% by implementing improved policies, legal support, and initiatives for training, capacity building, and upskilling.

As of 2H2023, albeit at a slow pace, Malaysia has experienced a gradual shift in the ratio of women to men in the workforce, indicating 56.2% of female labour force participation rate as compared to 82.8% of male labour force rate (Refer Chart 1). Historically, Malaysia has encountered formidable obstacles in attaining gender parity within its labour force, attributable to entrenched cultural norms, societal expectations, and structural impediments. Nonetheless, efforts to enhance female labor force engagement have gained traction, as indicated by data from the Department of Statistics Malaysia (DOSM), showing a progressive uptick in female participation (Refer Chart 2). The progress propelled by diverse factors such as improved educational access, evolving attitudes towards gender roles, and governmental initiatives targeting the economic empowerment of women. Notably, sectors like services, education, and healthcare have experienced a pronounced influx of female employees. However, notwithstanding these strides, a gender gap persists within the Malaysian labour market as women encounter enduring challenges such as wage differentials, constrained avenues for career progression, and the perpetuation of traditional gender stereotypes. As we gauge the number of recipients, median and mean monthly salaries and wages of employees by industry and sex from DOSM’ recent data, we discovered that female representation remains relatively scant in certain industries, particularly those reliant on human health, education, services, wholesale and retail, and manufacturing, with median lower salary compared to male (Refer Chart 3 and 4)

Leading the Way Towards Increased Female Representation on Corporate Boards

The Securities Commission Malaysia's revised Malaysian Code of Corporate Governance 2021, advocates for all boards to have a minimum of 30% women directors. Boards falling short of this requirement must disclose their strategies to achieve the 30% threshold within a reasonable timeframe, usually within three years. Furthermore, boards are tasked with evaluating women's representation in senior management to ensure a strong talent pipeline. Similarly, the Institutional Investors Council Malaysia, through their Malaysian Code for Institutional Investors 2022, emphasizes the expectation for investee companies to achieve at least 30% women representation on their boards by 2025.

According to the Gender Equality in Corporate Leadership report by the United Nations Sustainable Stock Exchange Initiative, the International Finance Corporation, and UN Women, Bursa Malaysia leads the region with 26% of board seats held by women (Refer Chart 5). This performance is closely followed by Vietnam (21%), the Philippines (20%), and Thailand (20%). Notably, 44% of issuers on Bursa have surpassed the 30% female board participation threshold (Refer Chart 6).

The compelling argument for investing in and supporting female leaders becomes apparent when considering the pinnacle of the corporate hierarchy, the CEO positions. Companies with women at the helm within the MSCI World Index have consistently outperformed those led by men in Return on Assets (RoA) metrics over the past decade,with an average outperformance (Refer Chart 7). We believe that regulators have primarily focused on diversity at the board level, while women's representation across other parts of organizations has received comparatively less attention. However, there has been a noticeable increase in diversity disclosures globally, driven by heightened investor inquiries, evolving Environmental, Social, and Governance (ESG) rating methodologies, growing interest in Diversity, Equity, and Inclusion (DEI) practices, and regulators' efforts to enhance disclosure of human capital-related issues.
 

Despite the significant strides made, challenges persist in reaching the goal of having 30% women on boards. The challenges involve the persistence of some Public Listed Companies (PLCs) maintaining all-male boards. To drive progress, Bursa has mandated that PLCs with a market capitalization of RM2bn as of 31st December 2021, must appoint at least one female board member by September 2022. Meanwhile, the remaining PLCs are required to comply with this mandate by June 2023. According to Bursa, as at 1st June 2023, the following PLCs have not fulfilled the requirement set by the Exchange to appoint at least one female director;
 

Empowering Women in Politics by Addressing the Gender Gap

More women than ever hold political decision-making posts worldwide but gender parity is still far off, according to the 2023 edition of the Inter-Parliamentary Union-UN Women Map of Women in Politics. It has been reported that, number of women in political leadership roles, both in government and in parliament, has increased overall but some regions lag far behind. Notably, Malaysia represents by 13.5% of women participation in the parliamentary, out of 222 parliamentary members and rank second lowest among the region (Refer Table 2). Meanwhile, in the World Economic Forum’s Global Gender Gap Report (GGGR) 2023, Malaysia ranked 89th in Global Gender Gap Index 2023 rankings for Economic Participation and Opportunity and rank 122th for Political Empowerment out of 146 countries. In Malaysia, women are still severely under represented when it comes to being selected as candidates to run for parliamentary office. Despite doing better in winning seats for major political parties, only 31 women being elected to parliament, represents only 13.5% from total seats.

Advocating a balance representative leading the nation, we believe there should be a greater demand to push for equality and for political parties, especially those running on a progressive platform to have a more balanced ratio of electoral candidates running for office. According to McKinsey Global Institute, investing in girls and women creates a ripple effect that yields multiple benefits, not only for individual women but also for families, communities, and countries. Studies also highlighted that increasing women's participation in politics leads to greater investments in education, and companies with females on its boards boast higher returns on investment. Additionally, gender balance in the political sphere promotes gender balance in the workforce, which could double global gross domestic product (GDP) growth by 2025. Despite that government agreed to a policy of at least 30% of top decision-makers should be women, we foresee that there is no further action in acknowledging the gender gap in politics.

Driving Innovation through Diversity

In the 4Q2023, Malaysia's labour productivity exhibited a growth trajectory of 0.7%, as reported by the Department of Statistics Malaysia (DOSM). This positive trend was accompanied by a notable increase in total hours worked, rising by 2.3% to reach a total of 9.4bn hours (Refer Chart 9). This resilience in labour productivity amid economic moderation underscores concerted efforts aimed at enhancing efficiency within Malaysia's labour market. However, there remains untapped potential within the workforce that could further bolster economic output. Greater workforce diversity has the capacity to unlock underutilized talents and introduce diverse experiences and perspectives, thereby fostering innovation and productivity. Unfortunately, prevailing gender stereotypes often marginalize women in various sectors, particularly in fields associated with technology and innovation.

Certain professions, such as teaching and nursing, have historically been dominated by women, emphasizing the importance of empowering future generations to pursue careers in traditionally male-dominated fields like engineering. By challenging and breaking down these gender stereotypes, we can cultivate a more inclusive environment that encourages balanced participation across all sectors. Inclusive representation from diverse genders, ethnicities, and cultures not only fosters a more conducive workplace but also facilitates better decision-making within institutions.

Academic Excellence vs. Workplace Challenges

In Malaysia, a significant gender parity exists in higher education enrolment, primarily stemming from the superior academic performance of female students in secondary schools. UNICEF report has demonstrated an academic excellence of female students across key subjects like English, Mathematics, Science, Bahasa Malaysia, and reading,

surpassing their male counterparts. Despite these academic achievements, women continue to be underrepresented in the labour force. According to DOSM’s statistic, female graduates, while more likely to attain university degrees compared to men, encounter higher rates of unemployment, constituting 54.2% of the unemployed population, with males at 45.8% (Refer Chart 10). An examination of the factors contributing to female graduate unemployment reveals diverse challenges. A significant portion of unemployed women, approximately 35.3%, attribute their joblessness to household or family responsibilities. Moreover, 32.3% of unemployed women are involved in training or educational programs, while a smaller percentage, 4.9%, opt to pursue further studies.
 

Although female graduates outnumber male graduates in employment, the gender disparity persists, with females accounting for 53.3% of employed graduates in 2022, while males make up 46.7% (see Chart 11). Despite a higher proportion of women in Malaysia obtaining tertiary education degrees, their engagement in the workforce remains significantly lower. This data emphasizes the complex challenges faced by women as they move from higher education to the workforce, indicating the need for specific measures to address gender imbalances and promote increased female participation and representation in the labour market.
 

Combating Domestic Violence and Closing Legal Loopholes to Promote Safe Workplace

Women's participation in the labour force is impeded by various factors, including domestic violence, irrespective of their backgrounds, qualifications, or accomplishments. According to the World Health Organization (WHO), intimate partner violence, particularly domestic violence, persists globally as a prevalent issue affecting women. This form of violence encompasses various abusive behaviours, including physical, sexual, psychological, verbal, emotional, and financial, enacted within domestic settings to exert dominance and control.

In combating gender-based violence, government’s initiatives like the Anti-Sexual Harassment Bill aim to ensure accountability for perpetrators and provide pathways to justice for survivors. However, concerns voiced by women's rights organizations regarding deficiencies in the bill, such as narrow definitions of sexual harassment and inadequate protections for complainants which present another obstacle. These shortcomings may deter survivors from reporting incidents due to fears of reprisal, underscoring the necessity for comprehensive legal safeguards.

Additionally, the government is intensifying efforts to fortify policies and legislation directly impacting women in the workforce. This encompasses reinforcing the National Women Policy and ensuring the robust enforcement of the Anti-Sexual Harassment Act of 2022. New guidelines for the phased implementation of the Anti-Sexual Harassment Advocacy Program including mandating the display of anti-sexual harassment notices in the premises of all organizations nationwide in Malaysia. Instances of sexist remarks by parliamentary members emphasize the urgent need for heightened protection of women's rights. Allowing offenders to receive mere warnings establishes an alarming precedent that could discourage women from pursuing careers in environments rife with harassment. Moreover, Malaysia's absence of specific legislation addressing marital rape leaves married women vulnerable, enabling husbands to evade prosecution for coerced sexual intercourse under specific circumstances. Rectifying legal loopholes, including those associated with child marriages, is essential to establishing robust legal frameworks safeguarding the rights and well-being of women and girls.

Malaysia's Journey Towards Workplace Equality

The GGGR 2023 underscores Malaysia's significant gender disparity in educational attainment, with female graduates (22.17%) outnumbering male graduates (10.77%) by a considerable margin of 11.4%. Moreover, in 2022, only 85.5% of women holding at least a degree will be actively engaged in the labour force, a figure significantly lower than the 94.5% observed for men. Datuk Seri Mohd Uzir, Malaysia's Chief Statistician, highlights that men generally earn more than women due to longer uninterrupted careers, while women often face breaks in employment for family and childcare responsibilities, contributing to wage discrepancies.

These disparities underscore entrenched gender inequalities in the labour market, emphasizing Malaysia's urgent need to address substantial challenges in achieving gender equality, particularly regarding women's underrepresentation in the workforce and the persistent gender wage gap. Career interruptions, particularly for women, result in financial strain as they bear caregiving costs without equivalent income, exacerbating financial insecurity and reinforcing the "motherhood penalty." Upon re-entering the workforce after such breaks, women often face challenges in male-dominated sectors like engineering, manufacturing, and construction, including promotion bypass, unequal treatment, and limited advancement opportunities despite their qualifications. Occupational segregation exacerbates gender disparities associated with career interruptions, driven by societal norms guiding boys towards science, technology, engineering, and math (STEM) fields and girls towards humanities or social sciences. Workplace biases, especially prevalent in male-dominated environments, heighten the risk of gender discrimination, particularly impacting mothers stigmatized for employment gaps.

Moreover, policies in key industries essential for the Fourth Industrial Revolution (4IR), such as manufacturing and engineering, tend to favour male employees, perpetuating gender biases and impeding women's career advancement opportunities. Furthermore, inadequate childcare support poses significant challenges for working mothers, compelling some to reduce work hours, take extended parental leave, or even resign from their jobs due to insufficient daycare options, leading to stress and guilt over childcare responsibilities. Administrative barriers in establishing daycares further compound the shortage, hampering efforts to address this critical issue.

Nevertheless, the Malaysian government acted decisively by announcing the rollout of the revised Employment Act 1955 which empowers employers to implement Flexible Working Arrangements (FWA), facilitating a more flexible timetable for employees (Refer Chart 12). Embracing FWA seeks to augment organizational flexibility, enhance work-life equilibrium, and ultimately elevate company efficacy, consistent with research by National Human Resource Centre (NHRC) in 2021 on FWA policy. The initiatives are underway to cultivate a conducive environment for women, encompassing subsidized daycare facilities and financial aid schemes for women entrepreneurs, exemplified by programs like MyKasih Kapital where women entrepreneurs are trained and encouraged to generate income from home and the two-year Exit Programme (2YEP) through the 'Productive Welfare’ approach, an initiative aimed at empowering welfare recipients to become self-reliant by learning various life skills, ensuring they do not remain dependent on government assistance indefinitely. Furthermore, endeavours are being made to enhance women's access to training and skill-building programs to augment their employability. Initiatives such as Wanita Bangkit, WeJana, and WeBridge are geared towards enhancing women's capabilities and equipping them for enhanced career prospects.

Furthermore, in alignment with the theme of Malaysia Madani for Women's Day, Prime Minister Datuk Seri Anwar Ibrahim has introduced a range of initiatives to enhance the empowerment of women. Among these measures is the i-Sayang initiative, designed to provide financial security for unemployed women or housewives. This initiative involves the voluntary transfer of 2% of husbands' EPF contributions to their wives' accounts. Additionally, efforts are underway to ensure that women hold a minimum of 30% of decision-making roles in government-linked entities by 2025.

Moreover, the government has established a RM1 million emergency assistance fund for women, known as the 'Tabung Kasih Rahmah Wanita,' to provide support to women facing various forms of distress, including victims of domestic violence and those abandoned by spouses or family members. Additionally, RM5 million has been allocated for data collection, research, and the promotion of upcoming women empowerment initiatives under the Women, Family, and Community Development Ministry.

These collective efforts underscore Malaysia's commitment to advancing gender equality and fostering the empowerment of women across various spheres of society. Government initiatives are empowering women to assume greater responsibilities and make meaningful contributions to the economy. By creating an enabling environment that supports women's progress and involvement, Malaysia stands to fully utilize the capabilities of its female workforce, leading to increased economic growth and prosperity. Continuing to invest in programs that promote gender equality and facilitate women's advancement in the workplace is crucial. While women's educational achievements have seen significant progress, their labour force participation still trails behind men's. However, these government-led efforts offer hope for a shift in this dynamic, aiming to provide more opportunities for women to excel and challenge existing stereotypes. Through such initiatives, Malaysia seeks to dismantle gender barriers and foster an inclusive workforce that drives progress and development nationwide.

Our Thoughts

Gender equality is part of fundamental cornerstone in Sustainable Development Goals (SDGs), whereby the SDG5 explicitly targets gender equality, interwoven throughout 10 additional SDGs. We shall acknowledge that gender equality goes beyond being solely a "women's issue", but rather that its impacts resonate throughout society as women's participation in the workforce and achieving gender parity are fundamental elements of good governance, contributing to economic development, social cohesion, political representation, accountability, and legal protection of women's rights. We believe that our collective failure to address gender inequality hampers progress for both women and men, hindering economic and social advancement. Globally, significant strides have been made towards gender equality where women are increasingly taking on leadership roles in both public and private sectors and more women are entering the workforce, opening opportunities for them that align closely with those available to men. However, we concur that, uncertainty surrounding the impact of the COVID-19 pandemic on women's progress is concerning, suggesting a disproportionate effect on women and marginalized groups. The pandemic crisis has starkly highlighted this reality, with more women than men leaving the workforce, shouldering the majority of unpaid household and homeschooling responsibilities also experiencing heightened instances of domestic violence. We are also concern on recent proposals of reducing pay rates despite offering flexible working hours for women civil servants, as announced by the Prime Minister. This could potentially deter women from participating in the workforce and reinforce the notion that managing household responsibilities is a woman's duty, rather than promoting shared responsibilities between genders and would the move affect their career advancement? On the other hand, the Exchanges, as central figures in the domains of business and finance, hold a significant responsibility in ensuring women's equal participation in economies and societies. It is important to remember that gender equality is an ongoing journey and fostering opportunities for all, requires urgent redoubling of efforts. This shall include the implementation of gender-sensitive employment policies, the provision of tailored skills training programs, and concerted campaigns aimed at dispelling gender biases. Additionally, advocacy initiatives spearheaded by civil society organisations and heightened awareness regarding the advantages of gender diversity should have contributed to cultivating a more inclusive work environment.
 

Source: BIMB Securities Research - 18 Mar 2024