Economics Education

[2915] Temporarily lowering labor force growth through massive government-funded tertiary education program

I do not think Malaysia has done enough in stabilizing our labor market. Policies introduced so far are inadequate in size, and have been implemented so late that its effectiveness is suspect. Each progress report by the Ministry of Finance feels irrelevant because even if all the measures recorded 100% implementation, it would still be insufficient. And the most relevant existing government countermeasures are progressing slowly.

We need to do much, much more to address the big problem we face in the labor market.

Our problem is massive unemployment

We are staring at a high likelihood of mass unemployment happening unlike anything we have seen in the recent past.

In 1998, the worst recession Malaysia has ever experienced yet, unemployment rate rose by about 70 basis points from 2.5% to 3.2%. For 2020, Bank Negara expected it to increase by about 60 basis point to 4.0%. But the projection was made well before anybody had an idea the lockdown would last more than 2 weeks. Hence, the central bank’s official view as recorded in its 2019 Annual Report is dated and any projection should be worse than what was published earlier.

Based on early indication from an unrepresentative survey by the Department of Statistics done later in late March, naïve extrapolation suggests unemployment rate could rise significantly higher. So much higher that mentioning the possible level of unemployment feels unreal. Yet, it is June now and the lockdown is still in effect though with looser restrictions.

The heightened risk of massive unemployment was the reason why we needed a much, much bigger wage subsidy program earlier. But we have failed to do so and the time for that has come and passed.

The bigger the hole, the more radical we need to be

The result: we now have a bigger hole to fill. We as a society are and will be experiencing more pain than necessary.

This comes to a minor point I want to make: the bigger the hole we need to fill, the more radical our policy response will need to be. And we have let the hole grew bigger unnecessarily due to political maneuvering and ministerial inexperience during a time of economic crisis. Make no mistake: the learning curve during crisis for a newbie will always be too steep that the optimal response will be almost impossible.

Passing the job hoarding stage

We have passed the job hoarding stage. Pass here refers to leaving the stage behind, and not in the “with-flying-colors” sense. We failed. We have failed to protect a huge number of jobs through a bigger and timelier wage subsidy program.

There is still some value to having wage subsidies. But the damage has been done and wage subsidy efficacy is weak at this point. You cannot subsidize jobs that have been lost.

We now have to move on and focus on other policies. Job creation programs are the obvious ones. There are other policies that could be implemented but I think the less obvious would be to move people out of the labor market temporarily. Call it the workforce reduction program if you like.

Brief explanation of jargons

To understand the need for workforce reduction program, one has to understand the way labor statistics works at the macro level. I promise, this will not be too technical as I myself am uninterested in explaining the technicalities.

Unemployment rate is the number of unemployed people over the labor force.

Meanwhile, the labor force is the sum of all those with a job or actively looking for a job. Those who are actively looking for a job and at the same time without a job are classified as unemployed.

The crucial part is that, the definition of the labor force does not include everybody. The too young and the too old are excluded. Those unemployed and not looking for jobs are excluded. Students are not part of the labor force. Technically, military personnel are not counted. You can argue whether these people should be included or not, but the point is, there are people outside of the labor force however you slice and dice the problem.

Here, I would like to focus on students in the tertiary level.

Minimizing unemployment given the crisis

We want to minimize the unemployment rate. To do so, we could increase the number of employed relative to the labor force to outpace the growth of the overall labor force. In common parlance, job creation. But creating more jobs is easier said than done.

Alternatively, we could reduce the labor force growth temporarily and then return the labor taken off from the equation back at a time when the labor market is healthier in a year or two years down the road. I think might be easier.

(I feel the need to say that both job creation and labor force reduction exercise are not mutually exclusive)

Massive expansion of tertiary education opportunities

This is my (radical?) policy proposal to help fill the hole.

I think one of the better ways to reduce labor force growth temporarily is for the government to embark on a massive publicly-funded program to get unemployed Malaysians and those suffering a high unemployment risk to go back to school. Specifically, enroll those interested in programs offered by public universities.

This program should include diploma, bachelor’s and graduate degrees. I think less for doctorate, and more for masters and below. PhDs generally serve a different purpose and the number of PhD placing in the country for a year is so low that it probably means nothing to the objective of reducing the labor force growth temporarily. This means we could give ourselves between roughly between 6 months and 2 years to repair the labor market.

I think for people wanting a second same-level degree could be given a chance to join the program.

Participants of the program could receive a reasonable stipend above minimum wage.

Other factors

While the objective of the program is to reduce the labor force temporarily, it has other factors at play:

  • Taking a portion of workers off the labor market helps balance bargaining power between workers and employers. At a time when there are a lot of workers looking for jobs and few job opening, workers are at a disadvantage.
  • The program would need massive funding into our universities, which itself could create more jobs, be it teaching assistants, lecturers or whatever positions there are associated with universities. In order words, pushing unemployed Malaysians or Malaysians at risk of unemployment could be job creating too. In any case, our universities are underfunded especially since the mid-2010s and this is a chance to address the problem.
Education Science & technology

[2620] Do not erect barriers to learning science and math

I am partial to an education system which has the English language as its medium of instruction. That is because I am most comfortable where English is the primary and the common language. While the Malay language is my mother tongue, I mostly use English to run both my private and professional life.

For a person with my background, it is reasonable for a stranger to expect me to be supportive of the policy (PPSMI) to teach science and mathematics in English. While I do sympathize with the policy, I oppose it.

I do not think anyone can doubt the importance of learning science and math. From the liberal education perspective, there are not too many other subjects that can liberate the mind the way science and math do. In terms of practicality, it offers a wide range of rewarding career choices.

To be good at both, one has to comprehend various scientific and mathematical concepts. The foundational lessons especially are crucial in allowing students to understand other more complex ideas. In both subjects, each concept is built upon an earlier concept. Failure to comprehend basic lessons will cause the student to struggle later. In a system where a student largely progresses based on his or her age, this can bring about a devastating snowball effect.

Learning those lessons can be harder than it is when both subjects are taught in a language that students struggle to master in the first place. That presents a two-layer barrier to mastering those basic scientific and mathematical concepts.

The language barrier adds to the frustration which can kill schoolchildren’s interest in science and math before the interest has a chance to bloom.

For many children from middle and upper-class families, English comprehension skills are not likely to be a problem. That is not true for the rest.

Consider a proxy to the mastery of the English language. Typically, families with higher incomes can be expected to have children who are better at English than those belonging to lower-income families. Here are the numbers. Based on the 10th Malaysia Plan, nearly 53% of households earned a monthly income of less than RM3,000 in 2009; about 66% earned less than RM4,000 a month; close to 76% earned less than RM5,000 a month.

The figures have probably improved since 2009. After all, 2009 was a recession year and we have recovered from that recession. Nevertheless, it is likely that a significant number of households still do not earn too much. This is a structural economic issue and such issues do not just change significantly in three years.

Notwithstanding the technical concerns about the evolution of household income over the past three years, that possibly means that more than half the children in Malaysia may have trouble with English. If PPSMI is to be continued in its blanket fashion as it was enforced earlier, that may lead to the making of a lost generation in terms of science and math education. As for the level of English, I am unsure if ­science and math classes are the place to learn English grammar, vocabulary and comprehension skills.

While I oppose PPSMI, that does not mean I think English is unimportant. I live in corporate Malaysia and in corporate Malaysia, English is the national language and not Malay. I know English is important. The inability to speak and write in English will come at a very great cost for fresh graduates and labor market veterans alike. I do believe that the teaching of English should be emphasized in all schools and at the early stages. The barrier to learning English should be reduced.

What PPSMI does to many students instead is that one, it does not reduce barriers in learning English — one does not learn grammar, vocabulary and comprehension skills in science and math classes — and two, it erects barriers to learning science and math for underprivileged children.

The point is that the teaching of English should not come at the expense of learning science and math.

At the very least, do not force students with a weak grasp of English to study science and math in English. Instead, let them improve their English in and outside of classes and let them learn science and math in the medium they understand best.

For students who already have a good command of English, let them study science, math and perhaps other subjects as well in English.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved
First published in The Sun on October 29 2012.

Economics Education

[2547] PTPTN debt a cost of affirmative action

Social mobility is crucial to the maintenance of a healthy liberal society. Inflexibility will have elites entrenched within the state apparatus and eventually becoming de facto dictators themselves, unless there is some sense of altruism among the elites. The monopoly of power itself is illiberal in so many ways.

There are ways to address the concern about social mobility and its illiberalness. The provision of education to the masses is one of them.

Education grants individuals the confidence to overcome haplessness. It provides the tools for individuals to rationalize the world and then encourage them to take fate into their own hands. With a good education, individuals will no longer be dependent on holy men’s words or beg the political elites for benevolence. Individuals will have their minds sharpened to make their own decisions. Education permanently grants individuals the motive for self-initiative for secular improvement and that is the engine of social mobility that will later help in creating a dynamic society that is liberal.

It is in this sense that equal access to education — basic education — is important.

The ability to read, write and count open up the doors of opportunity. Without these basic abilities, individuals will be disenfranchised from society. The disenfranchised will forever begin a race hundreds of steps behind, even before the race begins. They will likely form the underclass. Once one becomes an underclass, without intervention, it will be incredibly hard to break out from it. That calcifies social stratum and makes the journey towards an authoritarian society one step closer.

No self-respecting liberal will want to live a society with calcified social stratum. Permanent political monopoly is harmful to a free society. An intervention is required and justified and that intervention is the provision of mass education. That is the liberal rationale for basic education for all.

There is a limit to that rationale, however. Indeed, the rationale for education at the tertiary level changes. At the upper level, it is less about mass education than it is about meritocracy and specialization.

Not everybody has the aptitude for university education. That is why upper-level education has to be more meritocratic than primary- and secondary-level education. Even if it opened all without any filter, many would fail to make it to the end.

Under a meritocratic setup, those without the necessary aptitude must consider other tertiary options besides university education. The continuous pursuit of university education without the necessary aptitude will prove disastrous because there is heavy cost involved in terms of time and money.

To put it in another way, a meritocracy system will try to prevent a person from embarking on a costly journey that may end in failure anyway. It tries to save both time and money of the person and the society.

If one assesses the rationale for education at the individual level, it is mostly all about finance: one pursues university education with the expectation of earning higher wages in the future than he or she would without the same education.

Even without the explicit financial intention, it is generally true that the financial reward of having a degree is potentially tremendous. According to The Condition of Education 2011 published by the National Center for Education Statistics of the US Department of Education, those with a bachelor’s degree on average earn USD40,000 for the whole year in 2009. Those with high school diploma on average earn only USD25,000 for the year. The number will differ in Malaysia but the wage premium still exists.

The danger is that when one gets stuck in the system and fails to earn the degree. Another danger is that the degree earned does not give graduates a sufficient wage premium; not all degree commands the same wage premium. There are many reasons for that and one of them is quality of the degree.

In both cases, both the dropout and the graduate will learn that the cost of their university education will be too high compared to the returns of a university education. The education becomes less worthwhile.

The Malaysian problem is that there is or was a large-scale affirmative action with respect to university entrance. The proponents of affirmative action effectively and foolishly extended the rationale of mass education that is relevant to primary- and secondary-level education to the tertiary level, while ignoring the very different nature of tertiary education.

As a result, too many were encouraged to attend university and other higher education institutions without sufficient meritocratic consideration. Accommodation was made by rapid and significant expansion of places through the establishment of new education institutions. On the sideline, a state-backed mechanism—the PTPTN—was set up to help students to finance their education cheaply, and indirectly, to support private higher education service providers financially.

With the affirmative action and the disregard for meritocracy, quality eventually suffered. That affected the wage premium of those degrees.

This is probably what is happening to those who are unable to repay back their PTPTN loans. After having gone through university and other equivalent institutions and after having financed the cost through borrowing, they discovered the papers they earned did not command the wage premium necessary to make the education debt not a burden.

This can be linked directly to the issue of PTPTN and education debt. First of all, the financing option provided by PTPTN is cheap and it is effectively a subsidized financing option. On top of that, the cost of education at public universities is also cheap. The deputy prime minister was reported as stating that between 85 per cent and 95 per cent of tuition fees at public universities is borne by the government. The tuition fee itself is heavily subsidized.

Yet, graduates are having trouble repaying those cheap loans. When they are having trouble repaying, then it is likely that they are not earning enough. That in turn implies that their wage premium does not justify their investment in a university education. Further down the line, it suggests that those graduates should not have obtained their university education in the first place, if one assesses the issue strictly from a financial lens.

But they did obtain their university education, thanks to affirmative action. The graduates financed the cost of university by borrowing from PTPTN, an instrument of affirmative action. Now, what they have found is that the very instrument that enabled those graduates to become graduates is the very instrument that debased their papers, making the education debt a burden.

If that is still unclear, then let this be written: the debate about PTPTN debt in Malaysia is really a debate about the cost of affirmative action in the education system.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved
First published in The Malaysian Insider on May 7 2012.


[2488] Schooled in illiteracy

Ninety-three percent. The Malaysian literacy rate in 2009 was 93%, so says the United Nations Development Program in its latest Human Development Index report. But was it really?

I began to question the UNDP finding after reading a newspaper report that 8% of the National Service trainees are illiterate. It becomes worrying after one considers the context at which the eight percent is set in.

And the context is this. National Service trainees are chosen randomly from among 18-year-olds all across Malaysia. Assuming the 8% figure itself was derived through random means, it suggests that 8% of all 18-year-old Malaysians are illiterate.

One hopes that there was some significant non-random process at play. Maybe, the 8% came from a non-random sample. Maybe, these teenagers came from areas with notorious academic records and were overly represented in the sample. Although that would still be a problem, at least it would be a consolation. At least it would suggest the problem was not a systemic issue within the national system.

But if the process were random, then it would lead to the suspicion that the national literacy rate is lower than what has been reported.

This can be rationalized by understanding that the literacy rate tends to decrease as the age profile grows older for newly industrialized and industrializing countries. That includes Malaysia.

This is true simply because of secular trend. Access to primary education years ago was not as easy and widespread as it is today. That access has generally improved over the years. By implication, these 18-year-olds in general should have a higher literacy rate compared to their older counterparts.

If that is true, then it brings into question the Malaysian literacy rate itself. If the cohort study with arguably the best access to primary education has eight percent among them illiterate, one has to wonder about the credibility of the 93% literacy rate. With each older age profile having a similar or lower literacy rate, the national literacy rate might be lower than what has been estimated. At best, the standard used to measure literacy was too loose. Never mind the numeracy rate which is likely to be much worse than whatever the actual literacy rate is.

That in turn says a lot about the education system, notwithstanding its successes. It suggests that the education system is not as successful as it should be at imparting the most basic skills to schoolchildren: read, write and count. Not belief in god, not multiculturalism, not unity, not patriotism but read, write and count.

Other lofty and not-so-lofty agendas should take the backseat to these basic requirements. Without these basics, it will be really hard to acquire more complex higher-order skills and knowledge. Or they probably would not be able to use Google Translate at all, like somebody at the Ministry of Defense, apparently, can.

The biggest issue is that these 18-year-olds were allowed to graduate from school, if they actually even attended school. If they did attend school, then they must have had been pushed through the system regardless of their capability.

The way these students were pushed through the system is deplorable.

What instead should happen is that a student’s competency should be assessed each year. If the assessment is unsatisfactory, then students with normal learning capability should repeat the year until they are competent enough to go to the next level.

Of course, there should be a limit to how many times they can repeat but with almost everybody experiencing at least 11 years of schooling, surely there are enough years for the repeat to occur until these students can read. Any system that cannot ratify the problem within 11 years is a system unworthy of us.

Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved Mohd Hafiz Noor Shams. Some rights reserved
First published in The Malaysian Insider on January 13 2012.


[2452] PAGE is statistically wrong

The Parent Action Group for Education (PAGE) is a group known for its strong support for the teaching of science and mathematics in English in Malaysian public schools (the PPSMI policy). Its chairperson Noor Azimah Abdul Rahim argues the serial improvement seen throughout the years of PPSMI is a proof of success. They argue that that improvement is due to the policy.[1]

I am unconvinced that that is the case because such statistics is so raw in its presentation that it does not control for other factors.

How would we know if that improvement was not secular? Students’ achievements have been improving over the years even before PPSMI. It will be wrong to attribute all of those achievements to PPSMI. That factor as well as others should be removed before any reasonable conjecture could be made between PPSMI and achievements that the exams supposedly measured.

After that, how would we know what fraction of the improvement (or indeed even decline given that we only see net result) was due to PPSMI?

Even if all of those are accounted for, these improvements within the interested period are small enough that they are probably within the series’ standard error. In other words, the improvement could simply be some random variation with the mean essentially unchanged.

Consider the following graph I have pulled out from Noor Azimah and PAGE’s defense of PPSMI.

Take the science rural figures. The mean throughout the years is 90.6. The 68% confidence interval is between 88.9 and 92.3. Observe how many data points are within that band. The 95% confidence interval is between 87.2 and 94.1. Remember, this is before secular trend that has nothing to do with languages is taken out.

So, serial improvement as shown by PAGE through various graphs reproduced in Noor Azimah’s write-up does not really answer these questions.

To conclusive answer the questions, one has to compare two parallels, i.e. compare two series — one for PPSMI and another the status quo — concurrently. This will control for many things like grade inflation, secular improvement due to merely better education facility and access and the difficulties of the exam. After controlling all of these things, only then language will be the only factor being tested.

These two series do not exist side by side unfortunately.

The problem with Noor Azimah and PAGE’s argument is that they are comparing something that exists against something that does not and goes on to conclude that one that exists is better statistically. That is intellectual dishonesty.

The fact is there is no statistics to make the relevant comparison possible. Hence, there is no fact to make PAGE’s conclusion possible.

And, lest pro-PPSMI cheer, this is a double-edge sword. The statistics does not say anything about the alternative Malay-policy either.

That is the point however. The statistics does not say anything. PAGE however sees an elephant in the clouds.

Mohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reservedMohd Hafiz Noor Shams. Some rights reserved
[1] — GMP (Gabungan Mansuhkan PPSMI), led by PAS members is pushing the Government to stand firm on abolishing PPSMI (The teaching and learning of Science and Mathematics in English) yet again, and claiming that only 3% of pupils benefited from PPSMI.

Evidence to support the continuance or abolishment of PPSMI, should be based on the achievements in UPSR, PMR and SPM. That should be the benchmark. The test results of these three national examinations, proved to be very encouraging, clearly supporting the continuance of PPSMI while contradicting all statements that have been brought against PPSMI. [Noor Azimah Abdul Rahim. Pro-English group hits back: Don’t twist the facts for “political expediency”. Malaysia Chronicle. October 29 2011]