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Analysing the Impact of Experience, Education and Skills on Women’s Labour Force Participation

  • Fei Fuong Yap
  • Shyue Chuan Chong
  • Chia Yien Lim
  • Guat Guan Toh
  • 1719-1730
  • May 2, 2025
  • Education

Analysing the Impact of Experience, Education and Skills on Women’s Labour Force Participation

Fei Fuong Yap, Shyue Chuan Chong, Chia Yien Lim, Guat Guan Toh

Tunku Abdul Rahman University of Management and Technology, Kuala Lumpur, Malaysia

DOI: https://dx.doi.org/10.47772/IJRISS.2025.90400129

Received: 24 March 2025; Accepted: 29 March 2025; Published: 02 May 2025

ABSTRACT

In recent decades, Malaysia’s economy has experienced significant growth, marked by substantial increases in gross domestic product (GDP) and a strong expansion trajectory. This economic progress has heightened the demand for labour, bringing attention to a persistent challenge: the considerable gender disparity in workforce participation. Despite various policies aimed at promoting female involvement in the workforce—such as tax incentives, extended maternity leave, and childcare support—the rate of female labour force participation remains significantly lower than that of males. This persistent issue suggests that beyond economic policies, deeper structural and societal factors continue to hinder women’s workforce engagement. This study seeks to explore this challenge by integrating human capital theory, which emphasises education, skills, and work experience, with Maslow’s hierarchy of needs, which consists of physiological needs, safety, social belonging, esteem, and self-actualisation. Maslow’s theory will act as a mediating framework to analyse how different aspects of human capital influence women’s decisions to enter and remain in the workforce. By doing so, the study aims to provide a more comprehensive understanding of the barriers preventing higher female participation in Malaysia’s labour market. A clearer grasp of these factors is essential in addressing the gap between policy intentions and actual outcomes. By identifying key obstacles and offering targeted policy recommendations, this research contributes to efforts aimed at fostering greater female workforce participation. Enhancing women’s labour involvement is not only crucial for gender equality but also for ensuring sustainable economic growth and achieving Malaysia’s long-term development goals.

Keywords: Female Labour Force, Human Capital Theory, Maslow’s Hierarchy of Needs, Economic Growth, Malaysia

INTRODUCTION

With significant expansion over the past few years, Malaysia’s economic path has set the country as a major actor in the dynamic economic scene of Southeast Asia. Since the 1990s, Malaysia has maintained a steady rise in its gross domestic product (GDP), reflecting robust domestic demand and economic resilience. In the fourth quarter of 2022, Malaysia’s economy expanded by 7.1%, a notable achievement in the face of global uncertainties (Department of Statistics Malaysia [DOSM], 2023). With a growth rate of 5.6%, this encouraging trend continued throughout the first quarter of 2023, surpassing important regional economies including China (4.5%) and Indonesia (5.0%) (Ministry of Finance Malaysia [MOF], 2023). Such steady economic development emphasises the growing need for a labour-intensive component necessary to keep an expanding economy moving forward. There is a clear link between economic growth and labour demand; a lot of research supports the idea that a growing economy calls for a corresponding rise in labour supply to satisfy the increasing needs for products and services (Akhtar et al., 2020; Nor & Said, 2014).

Traditionally, labour-along with capital and land-is seen as one of the main forces behind economic growth-a perspective firmly anchored in classical economic theory. The labour force participation rate (LFPR) is a critical indicator of economic health, as it reflects the proportion of the working-age population actively engaged in the labour market (Pietak, 2014). However, in Malaysia, a significant gender disparity persists in labour force participation, raising concerns about the inclusivity and sustainability of the nation’s economic progress. Despite the country’s economic advancements, women have continuously underperformed in the workforce compared to men.

Figure 1 illustrates the labour force participation rate (LFPR) by sex in Malaysia from 1982 to 2023, highlighting a persistent gender disparity over four decades. Male LFPR has consistently remained above 80%, demonstrating stable and high male workforce participation throughout the period. Conversely, female LFPR has exhibited a significantly lower and more fluctuating trend, between 44.5% and 56.2%. Despite gradual improvements in female participation, the gender gap has remained substantial, with male participation reaching 82.3% and female participation only 56.2% by 2023. This persistent discrepancy highlights the structural underrepresentation of women in the formal labour market and reflects the socioeconomic constraints that prevent women from participating in formal employment.

The April 2023 labour force figures provide additional evidence of these impediments, revealing that women engaged in unpaid household work made up 43.6% of the 7.23 million people not in the labour force (DOSM, 2023). This underrepresentation of women in the workforce significantly challenges Malaysia’s aspirations of becoming a high-income economy. Research indicates that enhancing female labour participation, reducing gender disparities, and improving access to higher-productivity sectors are critical to sustaining Malaysia’s economic growth (Halim et al., 2016; Mansor & Syed Salleh, 2022). In order to serve the country’s larger economic objectives, Figure 1 graphically highlights the necessity of specific policies that advance gender equity and inclusivity in the workforce.

Figure 1: Labour Force Participation Rate by Sex, Malaysia, 1982 – 2023

Labour Force Participation Rate by Sex, Malaysia

Source: DOSM, 2024

When compared to other Asian nations, Malaysia’s female labour force participation trajectory shows a clear pattern. In countries like Japan and South Korea, female participation often follows a “double peak” trend, characterised by workforce exit during marriage and childbirth and re-entry later in life. In contrast, Malaysia exhibits a “single peak” pattern, where women’s participation rates peak between the ages of 25 and 29, subsequently declining as many women exit the labour market due to marriage and childbirth (Lim & Mohd Rasdi, 2019). This trend shows that despite major regulatory attempts to achieve gender equity, structural obstacles still stand in the way of women’s full integration into the Malaysian workforce.

The Malaysian government has taken a number of steps to boost women’s employment since it understands the economic necessity of greater female labour participation. The 1989 National Policy on women established the groundwork for efforts to promote gender equality, which have since grown to incorporate contemporary measures like tax breaks for women who return to the workforce, a 98-day maternity leave extension beginning in 2023, and a seven-day paternity leave policy (MOHR, 2021; Nadworny, 2022). Additionally, amendments to the Employment Act 1955 now allow for flexible work arrangements, and the Anti-Sexual Harassment Act 2022 enhances workplace safety and inclusivity (Mohd Noor et al., 2022; Samantha, 2023). These policies demonstrate Malaysia’s dedication to fostering an atmosphere that encourages women to participate in the economy.

Even so, Malaysian women’s labour force participation has only increased by less than 5% over the last ten years, despite these intense efforts (DOSM, 2023). This stagnation points to a persistent gap between policy intentions and real-world outcomes. Deep-rooted gender inequality and societal norms continue to constrain women’s workforce participation despite higher educational attainment among women (World Bank, 2022). The underutilisation of female talent not only hampers economic growth (Ghosh, 2022) but also raises questions about the effectiveness of Malaysia’s educational investments and corporate diversity initiatives (Adams & Ferreira, 2009; Kim & Starks, 2016).

Given these obstacles, the Ekonomi Madani framework and the Twelfth Malaysia Plan highlight how important it is to boost female labour force participation as a catalyst for long-term economic growth. These strategic frameworks reflect the government’s commitment to aligning policy objectives with outcomes, ensuring women’s contributions are fully integrated into the national economy. However, given the persistent gender gap and the inconclusive findings from previous research on women’s labour market entry, a more comprehensive investigation is essential. A nuanced understanding of the barriers and enablers to female labour participation will be vital in formulating effective policies that address the existing gaps and unlock the full potential of Malaysia’s labour force.

There are still many obstacles to overcome in spite of Malaysia’s numerous governmental initiatives aimed at increasing the number of women in the labour sector. By using a thorough framework that combines Maslow’s hierarchy of needs with human capital theory, this study aims to address these issues and provide a better understanding of the variables influencing women’s employment. In particular, this study looks at how education, skills, and experience influence women’s labour force involvement and investigates the psychological factors that influence these choices.

The primary goals of this research are to: (1) examine the relationship between major human capital factors, such as education, skills, and experience, and female labour force participation in Malaysia; and (2) examine how psychological factors, as defined by Maslow’s hierarchy of needs, mediate labour market behavior. In addition to adding to the expanding body of research on gender and labour economics, this study bridges the gap between economic theory and psychological frameworks, providing useful information for company executives and policymakers looking to advance gender parity and boost economic productivity.

LITERATURE REVIEW

Theoretical Foundations: Human Capital Theory and Maslow’s Hierarchy of Needs

Human capital theory, which holds that investments in education, skills, and experience raise an individual’s productivity and earning potential, has largely been used to analyse the research of female labour force participation (Becker, 1962). Numerous studies have applied this theory to understand women’s labour market behaviour, particularly in developing countries like Malaysia (Besamusca et al., 2015; Lama & Kuri, 2017; Runde et al., 2022). According to human capital theory, higher levels of education and skill acquisition are expected to naturally result in greater female participation in the workforce. However, these studies often fall short of explaining the complex, multi-faceted reasons behind women’s labour force decisions. A supplementary viewpoint is offered by the psychological framework known as Maslow’s hierarchy of needs, which examines the reasons behind human behavior, from fundamental physiological demands to self-actualisation (Maslow, 1943). This hierarchy emphasises the importance of non-economic factors that may affect women’s decisions to enter the labour, such as self-fulfilment, belonging, and esteem. While human capital theory emphasises economic incentives, Maslow’s framework underscores the importance of psychological and social drivers. Some researchers have begun to integrate these two frameworks to better capture the motivations of women entering the labour market, recognising that economic factors alone are insufficient to explain labour force participation, particularly in culturally and socially complex environments like Malaysia (Imhanrenialena et al., 2022).

Empirical Evidence: Education, Skills, Experience, and Labour Force Participation

It has long been acknowledged that one of the main factors influencing women’s labour force participation is education. Higher education levels are regularly linked to more women in the workforce, according to studies (Besamusca et al., 2015; Lama & Kuri, 2017). These findings align with human capital theory’s predictions. However, research on educational attainment and labour force participation in different cultural contexts has produced mixed results. For instance, Kumagai and Kato (2007) discovered that married women’s employment in Japan was not much impacted by schooling, suggesting that cultural and societal norms may override the economic benefits of education in specific contexts. This finding raises important questions about the universality of human capital theory’s application to female labour force participation.

Women’s employment outcomes are also significantly influenced by their skills and experience. Women are more likely to enter the workforce and get higher-paying jobs if they have more work experience and specialised skills (Runde et al., 2022). However, access to skill-building opportunities remains uneven, particularly in developing economies, where gendered barriers to education and training are prevalent. Women’s chances for skill development and job success in Malaysia are still constrained by societal norms and traditional gender roles (Shaari & Amirul, 2023).

Beyond Human Capital: Psychological Motivations and the Role of Maslow’s Hierarchy of Needs

While human capital theory provides a robust framework for understanding the economic factors influencing female labour force participation, it does not fully capture this phenomenon’s psychological and social dimensions. By stressing the requirement of psychological incentives including self-esteem, belongingness, and self-actualisation in driving labour market behavior, Maslow’s hierarchy of needs closes this gap. Many women, especially in underdeveloped countries, find their choice to enter or stay in the workforce shaped by economic need as much as by the need for respect, recognition, and a feeling of purpose (Maslow, 1943; Imhanrenialena et al., 2022).

For women trying to enter the workforce in Malaysia, the junction of cultural standards and psychological requirements offers difficulties. For example, despite implementing policies such as tax exemptions and flexible work arrangements, these initiatives often fail to address women’s psychological needs, such as the desire for respect and recognition in the workplace (Mohd Noor et al., 2022). Because of this, these measures might not be very successful in encouraging long-term female labour force participation. This emphasises the necessity of designing policies with a more comprehensive approach that takes psychological and economic aspects into account.

The Business Case for Female Labour Force Participation

From a business perspective, including women in the workforce is a matter of equity and a strategic imperative. Female employees bring unique skills, perspectives, and consumer insights that can enhance business performance, particularly in sectors such as sales and marketing (Adams & Ferreira, 2009; Kim & Starks, 2016). Women’s sensitivity to specific market needs, particularly those of female consumers, can give companies a competitive advantage. Additionally, keeping female employees lowers attrition and related training and recruitment expenses, and their long-term strategic thinking and painstaking attention to detail support overall corporate success.

Despite these advantages, a lot of business practices continue to prioritise macroeconomic goals, such raising the general rate of female labour force participation, over meeting the microeconomic demands of women, especially their psychological drivers. Given that both economic and non-economic factors affect women’s decisions to enter and stay in the labour, this omission reduces the effectiveness of such measures.

Gaps in the Literature and the Contributions of This Study

Although there is extensive research on female labour force participation, several gaps remain unaddressed. Existing studies have primarily focused on human capital variables-education, skills, and experience-without fully considering the psychological motivations influencing women’s labour market behaviour. Furthermore, despite the implementation of measures intended to increase female labour force participation, their efficacy has been limited, as seen by Malaysia’s sluggish rise in female labour force participation during the previous ten years (DOSM, 2023). This implies that in order to better understand and solve the obstacles to female labour market participation, a more thorough strategy including psychological and economic elements is required.

By using a dual-theory framework that combines Maslow’s Hierarchy of Needs and Human Capital Theory, this study aims to close these gaps. This study offers important insights by looking at how education, skills, and experience affect women’s labour force participation. It also examines the part played by psychological incentives, providing a more thorough and integrated examination of the various aspects affecting women’s choices in the job market. The study’s conclusions will give corporate executives and legislators important information that they can use to create more sensible laws and procedures that encourage women’s full employment.

CONCEPTUAL FRAMEWORK

In order to explain the dynamics of female labour force participation, the conceptual framework depicted in Figure 2 combines Maslow’s Hierarchy of Needs Theory with Human Capital Theory. This dual-theory framework offers a comprehensive approach by considering economic factors (education, skills, and experience) and psychological needs (physiological, safety, social, esteem, and self-actualisation) impacting women’s choices to join and stay in the workforce.

Human Capital and Female Labour Force Participation

This framework’s foundation is based on the Human Capital Theory, which holds that investments in education, skills, and experience raise a person’s productivity and, in turn, their chance of entering the workforce. Higher-educated women are more likely to enter the workforce, according to studies on female labour force participation, which has extensively used this hypothesis (Abramo & Valenzuela, 2005; Besamusca et al., 2015; England et al., 2012; Gan, 2008; Tzannatos, 1999). In a similar vein, gaining pertinent skills has increased female labour force participation (Guner et al., 2020; Kumagai & Kato, 2007; Sardar Naeem, 2022). Furthermore, work experience is a significant factor in workplace engagement, with more experienced workers showing greater levels of dedication to their positions (Çemberci et al., 2022; Schieck off & Diehl, 2021; Teichert et al., 2023; Xepoleas et al., 2020; Yildirim, 2008).

The framework hypothesises three direct effects:

H1: Education will have an effect on female labour force participation.

H2: Skills will have an effect on female labour force participation.

H3: Experience will have an effect on female labour force participation.

These theories emphasise the critical role that human capital factors play in determining the outcomes of the female labor market.

Maslow’s Hierarchy of Needs Theory and Female Work Motivation

The framework incorporates Maslow’s Hierarchy of Needs Theory to better understand the psychological factors driving women’s behavior at work. Human motivation advances along a hierarchy of requirements, according to Maslow’s hypothesis, from basic physiological needs to self-actualisation (Maslow, 1943). The conceptual framework proposes that female work motivation, as influenced by education, skills, and experience, can be mapped onto the different levels of Maslow’s hierarchy.

The most basic level of Maslow’s hierarchy, physiological needs, can be satisfied through income derived from education, skills, and work experience. Studies have shown that higher wages, which result from human capital investments, allow individuals to meet their essential needs, such as housing and food (Lama & Kuri, 2017; Olaniran et al., 2022; Larsen et al., 2011; Oswald-Egg & Renold, 2021). Safety needs relate to job security and the assurance of stable employment. Research suggests that higher education levels and specialised skills provide individuals with greater job security, fulfilling their safety needs (Morrison, 2014; Emmenegger, 2009). Additionally, work experience can lead to benefits such as life and health insurance, further contributing to safety needs (Yumol, 2018).

Social needs, which encompass relationships and belonging, are also addressed by human capital factors. Education and skills can facilitate social connections, while work experience can enhance teamwork and communication, fostering a sense of belonging and social integration in the workplace (Gomes, 2020; Paolucci et al., 2021; Hosseini et al., 2022). Human capital also influences esteem needs, which involve self-worth and recognition. Higher education and skills can lead to higher income and personal reputation, fulfilling individuals’ esteem needs (Gan, 2008; Zinko et al., 2012). Successful work experiences, such as completing significant projects, also contribute to positive self-esteem (Pierce & Gardner, 2004).

Lastly, reaching one’s full potential is linked to self-actualisation, the top level of Maslow’s hierarchy. Education, skills development, and diverse work experiences contribute to personal growth and career success, which are integral to self-actualisation (Lawati, 2019; Gcezengana et al., 2022; Koekemoer et al., 2019).

Mediating Role of Female Work Motivation

The paradigm postulates that the association between human capital variables and female labour force participation is mediated by female work motivation. This mediation implies that through its effect on psychological needs, human capital-that is, education, skills, and experience-influences female labour force participation in an indirect manner.

The specific hypotheses related to this mediation are:

H4: Female work motivation will have a mediating effect between education and female labour force participation.

H5: Female work motivation will have a mediating effect between skills and female labour force participation.

H6: Female work motivation will have a mediating effect between experience and female labour force participation.

For example, an individual’s wage rate, influenced by work experience, not only fulfils physiological needs but also affects their decision to continue participating in the labour force (Olaniran et al., 2022; Thenuwara & Morgan, 2016). Similarly, education and skills can enhance job security, fulfilling safety needs and encouraging sustained labour market engagement (Adejumo et al., 2021).

Figure 2: Conceptual Framework

Source: Author’s own creation

According to Maslow’s hierarchy of needs, the conceptual framework in Figure 2 shows how psychological requirements and human capital elements interact intricately to influence female labour force participation. A thorough grasp of how psychological and economic factors influence women’s decisions to enter and stay in the workforce can be obtained by combining these two theories. In order to boost female labour force participation, it is critical to address both tangible and intangible motivators, as evidenced by the mediation function of female work motivation.

METHODOLOGY

This study adopts a positivist research approach, emphasising empirical data and statistical analysis to uncover generalisable patterns and relationships. Because it enables objective measurement and analysis of the factors impacting Malaysian women’s labour force participation, the positivist approach is appropriate for this study. The target population for this study is approximately 11.0 million women aged 18-60 years in Malaysia. Based on established guidelines, a sample size between 150 and 400 is appropriate for research employing Structural Equation Modeling (SEM) (Hair et al., 2022). According to Saunders et al. (2019), with a target population of 10.0 million and a 5.0% margin of error, the required sample size is 384. A sample size of 400 was judged appropriate for this investigation in order to guarantee robustness. SurveyMonkey and calculator.net were used to determine the appropriate sample size, both of which indicated that 385 participants would be required. A convenience sampling approach will be employed to select 400 female respondents aged 18-60 from the Klang Valley, Johor, and Perak. These regions represent 47.2% of Malaysia’s total population and are considered representative of the study population. Specifically, approximately 200 respondents will be collected from Klang Valley, and 100 from each of Johor and Perak. Convenience sampling is chosen due to logistical constraints and the need for efficient data collection, permitting the researcher to select volunteers based on their accessibility and availability. To measure several aspects of female labour force participation, a structured questionnaire will be created. To gauge respondents’ opinions and experiences, the survey will include five-point Likert scale questions that range from “strongly disagree” to “strongly agree”. In order to guarantee validity and reliability, questions will be modified from earlier studies. The questionnaire will cover key constructs such as human capital, need satisfaction (based on Maslow’s hierarchy), and labour force engagement. Data will be collected through two primary methods: in-person interviews and online surveys.

Using SmartPLS software, this study analyses data using Partial Least Squares Structural Equation Modeling (PLS-SEM). Because of its predictive power and status as a second-generation structural equation modeling technique, PLS-SEM was chosen. Because it enables the simultaneous analysis of numerous regression models, even with complex models and smaller numbers of samples, this method is especially well-suited for exploratory research and predictive modeling. A reflective measurement model is used for this investigation. Indicators used in reflective constructions have a strong correlation with one another. Measures like Cronbach’s alpha and composite reliability will be used to evaluate these constructs’ reliability, while measures of convergent validity like average variance extracted (AVE) and discriminant validity like cross-loadings and the heterotrait-monotrait ratio (HTMT) will be used to evaluate their validity. The structural model will be assessed using criteria including collinearity, significance of path coefficients, coefficient of determination (R2), effect size (f2), and predictive relevance (Q2) once the measurement model has been examined. R2 gauges the model’s predictive ability, and hypothesis testing will be used to assess the relevance of path coefficients. While predictive relevance (Q2) evaluates the model’s capacity to forecast results, effect sizes (f2) offer information about the relative importance of predictor variables. This study’s use of PLS-SEM enables a thorough examination of the intricate connections among female labour force participation, need fulfilment, and human capital, offering important new information on the study’s goals.

EXPECTED OUTCOME AND CONCLUSION

The study predicts that the increase of human capital will have a beneficial effect on female labour force participation, and that Maslow’s Hierarchy of Needs will play a substantial mediating role in this relationship. The results should support Malaysia’s Ekonomi Madani objectives by providing evidence-based suggestions for policies that advance economic growth and gender equality. Maslow’s Hierarchy of Needs, human capital development, and female labour force participation in Malaysia are all examine in this study. Furthermore, the beneficial effects of human capital on female labour force participation should be amplified by Maslow’s Hierarchy of Needs, which acts as a substantial mediator. This study will have a broad ramification, emphasising the necessity for governments to assist women’s labour market participation through a comprehensive strategy that incorporates social, educational, and economic initiatives. Malaysia can achieve the objectives of the Ekonomi Madani project, advance gender equality, and promote sustainable economic growth by addressing both human capital and need fulfilment.

LIMITATIONS AND FUTURE RESEARCH DIRECTIONS

This study has limitations even if it offers a conceptual framework connecting female labour force participation, Maslow’s Hierarchy of Needs, and human capital development. The work lacks empirical validation as a theoretical investigation, so future research using cross-sectional and longitudinal data is required to test the suggested links. Furthermore, more detailed information about differences in female labour force participation across industries may be obtained by sector-specific analysis. To further improve the conceptual model, future studies should also take into account different mediating or moderating factors, like institutional support systems and policy interventions. By filling in these gaps, future empirical research can help strengthen our knowledge of the variables affecting women’s participation in the labour market, which will ultimately help us develop more focused and efficient policy initiatives.

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