| Worker’s quality is very crucial to enhance efficiency level in an organisation. |
| Worker’s quality is very crucial to enhance efficiency level in an organisation. Workers of high quality are always associated with high efficiency and productivity, which subsequently increase competitiveness of an organization. In the Malaysian context, technical efficiency in the manufacturing sector is vital to be observed due to its significantly 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 reflect workers productivity when examine its effect on technical efficiency. This paper aims to analyze level of worker’s quality or referred as effective worker using composite measurement and examine its impact on technical efficiency for the Malaysian manufacturing firms. Analysis is based on 1077 manufacturing firms in 2009 obtained from the Department of Statistics Malaysia, through the Survey of Manufacturing Industries 2010. The findings show that level of effective workers and technical efficiency for the manufacturing firms are still at the moderate level and even low for the micro-sized firms. The main determinants of technical inefficiency are effective workers, ICT expenditure, training expenditure and R&D expenditure. The results suggest that the manufacturing firms should enhance their human capital investment and increase their expenditure especially on training and R&D in order to increase its efficiency. |
