Rahmah Ismail · Syahida Zainal Abidin · Mohd Nasir Mohd Saukani ·Jurnal Ekonomi Malaysia ·2019
Worker’s quality is very crucial to enhance effciency level in an organisation. Workers of high quality are always associated with high effciency and productivity, which subsequently increase competitiveness of an organization. In the Malaysian context, technical effciency in the manufacturing sector is vital to be observed due to its signifcantly high contribution to Gross Domestic Product (GDP). In addition, this sector has rapidly created employment opportunities and listed under National Key Economic Area (NKEA). Worker’s quality can be measured using several methods, which are generally based on human capital achievement. The measurements that are frequently used in the literature are level of educational attainment and worker’s job category. However, these measurements ignore the role of wages, which refect workers productivity when examine its effect on technical effciency. This paper aims to analyse level of worker’s quality or referred as effective worker using composite measurement and examine its impact on technical effciency for the Malaysian manufacturing frms. Analysis is based on 1077 manufacturing frms in 2009 obtained from the Department of Statistics Malaysia, through the Survey of Manufacturing Industries 2010. The fndings show that level of effective workers and technical effciency for the manufacturing frms are still at the moderate level and even low for the micro-sized frms. The main determinants of technical ineffciency are effective workers, ICT expenditure, training expenditure and R&D expenditure. The results suggest that the manufacturing frms should enhance their human capital investment and increase their expenditure especially on training and R&D in order to increase its effciency.