HUMAN CAPITAL AND WORKFORCE DURING COVID19

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HUMAN CAPITAL AND WORKFORCE DURING COVID19

Alysha Nur Affika Madsidik, Farid Farhan Hasbullah, Izza Elfaranica Jaafar, Shahiratul Hidayu Nasrul, Siti Aisah Mohamad, Siti Nurfilzah Hamid & Roslinah Mahmud*

Faculty of Business, Economy and Accountancy Universiti Malaysia Sabah

*Correspondings Author: roslinah@ums.edu.my Pandemic Covid19 and Workforce

The current issues which is pandemic COVID-19 has caused disruptions to our daily lives, businesses and the economy which also drive the effect on workforce and investment in human capital in Malaysia. Pandemic COVID-19 that led to the implementation of the “New Norms” has been educating people around the world, including Malaysia, to change their daily lifestyle in order to priorities health and safety. New norms mean set a new way of living. That includes daily routines, cultural beliefs, change of thought process of an individual, family, community, country, region, and eventually the world. New norms and the effect on workforce and human capital investment in Malaysia are in separable. New norms on workforce leads to many new ways of work. For example, the employers have to adjust their workforce to accustom with the unprecedented situation. Employers will need to be prepared to respond to the new norms since as the virus attack, many may ponder if their workplaces will ever be the same again.

The new norms which everyone in the workforce that have to work need to wear a mask every time, make sure they are healthy to come to the workplace, check their body temperature before going in, also need to apply the social distancing everywhere and have to sanitize well to avoid the spread of the virus. As many companies tend to change the way of work to a virtual work, they will be increasingly dependent on technology for remote access. To sustain business success, effective channels to promote communication, connectivity and collaboration are necessary. So, the responsibility of employers to make sure that everyone in the workforce is aware with the new way of work also provide the workers with all the knowledge on how to adapt with the remote work.

Human capital investments in Malaysia like the health, skills, and knowledge that people have accumulate over their lives just to unlocking a potential and to improve economic growth in their country have been interrupted by this pandemic ‘new norms’. The new norms due toCOVID-19 pandemic also negatively affected the human capital investment in Malaysia. Human capital investment is slowing down for the time being cause by the new norms where a lot of places are not allowed to be open. For example, Regular health care visits were not made and, due to COVID-19- related closures, many students did not attend schools and universities.

Even though the COVID-19 pandemic which is new norms has brought effect on the work force such as Small Medium Enterprise (SMEs), productivity of the workers, also the unemployment but this has leads to a thought on how to solve this problem is by doing investment in human capital. Investment in education, investment in health also investment in training workers is important during this new norm. New norms that acquire due to pandemic COVID-19 cause a lot of people are affected as a whole, it also effects the workforce and investment in human capital in every country in the world including Malaysia itself. These new norms do affect the workforce for Small Medium Enterprise (SMEs), productivity, and unemployment in Malaysia. So, investment in human capital in terms of education, health and training workers should be done as one of the ways to solve the problem cause by the new norms towards the workforce in Malaysia.

2 Human Capital

The definition for human capital corresponds along the additional benefit given by people or employees to differentiate it between companies. This is considered a real competitive advantage (Boroujerdi et al. 2014, as cited in Mukhalipi, 2018). Boroujerdi et al. (2014) as cited inMukhalipi (2018) stated that human capital is considered as organization's person representative, and comprises a mixture of knowledge, abilities and specialisations made accessible to the organisation by individuals who are completely unique. Every person contributes human capital towards their organisation then build it by skills, experience, and schooling (Baron &Armstrong, 2008, as cited in Mukhalipi, 2018).

Human capital is neither merely a resource nor an instrument for improving a company's efficiency and economic value. Human capital is an intangible asset for a developing country in its attempts to escape from poverty, backwardness and encourage economic growth. The importance of the production of human capital can be understood, according to Harbison (1973), as cited in Awalluddin (2019, p. 205), from deliberation and the uninterrupted process of gaining the requisite knowledge, skills and experience that can be used to generate economic value to drive national development.

Consequences

The world now faces with Covid-19 virus that affect world’s economy such as SMEs, productivity, and unemployment. According to Wahyudi, (2014); Craven et al. (2020); Smith-Bingham & Hariharan (2020) as cited in Omar et al (2020, p. 141), the consequences of coronavirus upon on business activities of SMEs globally are enormous. While there is a need for specific government policy and solutions towards preventing the epidemic, many companies are vulnerable with adverse impacts in long and short terms. Cash flow concerns, closure of facilities, cutting down employees, resignations and weakened potential of companies in potential development become huge challenges in Malaysia.

As cited in Omar et al (2020, p. 141), adjustments on business strategies, value to organizational attitudes, and desire to find different resources and redevelopment possibilities, are identified as vital survival obstacles among many SMEs. During this pandemic, Svatosova (2017) as cited in in Omar et al (2020, p. 143) emphasizes the significance of problem, restitution, and recovery solutions for SMEs.

There quired solutions can help to reduce the risk towards collapse of business as well as terrible financial effects.

The effects of Covid-19 can reduce productivity as well as restrict the capacity of economies to produce net income growth in the long term (Dieppe, 2020). Typically, productivity is defined as a determination of the effectiveness to output produced per input unit (Linna, 2010, p. 301). An upsurge of deteriorating driving forces of productivity growth is more likely to worsen due to Covid-19 (Djiofack et al. 2020 as cited in Dieppe, 2020). According to Dieppe, (2020), the coronavirus outbreak affects investment, restricts trade, limits on foreign direct investment and migration where it would slow down the redistribution of employees away from low-productivity companies to higher-productivity ones. Covid-19 outbreak is also able to deep impacts, such as lower investment, depletion of human capital because of unemployment, lack of education as well as a potential exit from international trade and supply. All such implications can decrease productivity and restrict economies' ability to produce real income growth in the long term. A holistic approach to rekindling productivity growth is required to encourage investment in physical and human capital during this pandemic.

Apart from that, Covid-19 pandemic also makes several people unemployed due to companies cutting their staff off. Yanuar (2016) as cited in Sanjaya et al (2020, pp. 3-4) has defined unemployment as an issue that can impact human life in the macro economy. Unemployed are people who do not have a

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job and are not eager in seeking the job. Those that have reached legal age and employment opportunities but still not have a job are the groups included in unemployment. According to the Department of Statistic Malaysia (DOSM), in August 2020, Malaysia unemployment rate is still at 4.7 percent relative to the previous month where DOSM estimated 741,600 people are unemployed even though labour force increased around 15.9 million people as Malaysia faced the effects of the coronavirus. Fortunately, Datuk Seri Dr Mohd Uzir Mahidin, a Malaysia chief statistician stated that with economic industries starting to reopen, Malaysia's labour force condition strengthened more in August 2020. Nonetheless, the pandemic situation in this country would affect the continuous development of Malaysia's industries (Shankar, 2020).

Therefore, investment in human capital like education, training and health can help Malaysia’s economy during or post Covid-19 pandemic. Investment in education is important because it also can increase companies’ productivity. Black and Lynch (1996) as cited in Yunus et al (2014, p. 135) stated there is a positive connection linking the years of education with productivity of employees, specifically in companies that have a significantly higher level of worker's education. Moretti (2004) analysis as cited in Yunus et al (2014, p. 135) revealed that a 1 percent rise in the number of educated workers from college contributes to a 0.6 to 0.7 percent increase in productivity, including greater yields for high-technology sectors. Besides, Malaysia's higher learning institutions leap its programmes towards implementing e-learning strategies, indicating Open and Distance Learning (ODL) methods following emerging from the Covid-19 outbreak. Local and foreign investors are encouraged by the Malaysian Investment Development Authority (MIDA) to exploit investment opportunities in the virtual learning field. MIDA always encourages other businesses to engage with high-value-added and skilled technology in new growth areas to build a welcoming and stimulating lifelong learning environment in Malaysia (MIDA, 2020).

Moreover, same as investment in education, investment in training workforce during the pandemic also important. Ballot et al (2001) as cited in Yunus et al (2014, p. 135) stated by offering valuable knowledge and skills, the human capital gained from education and training contributes to the competitiveness of a company. Higher productivity may benefit from the results of particular types of training. More precisely, an addition of 10 hours a year for all workers' training contributes to a rise of 0.6 percent in current productivity. Research by Barrett and O'Connell (2001) also as cited in Yunus et al (2014, p. 135) shows that preparation, whether it is basic or general training, contributes to a major positive improvement in labour productivity.

In terms of investment in health where according to Kansra & Pathania, (2012) as cited in Aldosari et al (2014), among the most significant requirements for human productivity is good health, and this in turn contributes to the overall growth of a community. Health is recognized as the essential starting point for the state of well-being of an individual and it is also considered a significant asset even for a country to achieve national goals of growth. Good health increases the labour force's productivity and boosts economic growth. That alone plays a key role in enriching government efforts to ensure that health care services are available and affordable to the community. Bhattacharjya (2016) stated that strategic investment in health globally not just offers improved health and enhances well-being for more individuals, it also stimulates economies, creates jobs and boosts personal productivity. Simply put, a critical economic and social driver is investing in health. Hence, investment in health during Covid-19 indeed also important.

4 Conclusion

Investing in human capital can reduce the issues related to the workforce, and through the human capital investment that highlights on education, health, and training workforce may speedily develop the economy of Malaysia. Human capital investment in education may increment the development of innovation, get extra knowledge and ideas for information and aptitudes. Moreover, the growth and expansion in human capital may increment occupation openings since individuals are willing to carry out commerce. Besides, business people can make work openings for unemployment and maintain a strategic from loss ability human capital. Other than that, human capital investment in health is alluding to the anticipation of infections by taking any healthful care supplements and getting superior more healthy, and longer life expectancy. Great nourishment retained by the body may increment the labor efficiency through the capacity to work longer hours and remunerated extra pay for well-being also decreasing income inequality.

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