Impact of workers’ competence on their performance in the Malaysian private service sector

Malaysia has to address the challenges of globalization to become a developed nation by year2020. Changing economy to one that is based on knowledge-economy and enhanced importanceof the service sector needs a competitive workforce with high performance and capability. Thisarticle analyses the impact of workers’ competence towards their performance in the privateservice sector. The analysis is based on a sample of 1136 workers who are either executive,manager or professional from three service sub-sectors, namely, education, health andinformation and communication technology (ICT) in Selangor, Federal Territory of KualaLumpur, Penang and Johor collected in 2007/2008. In this analysis, Workers’ Performance Index(WPI) and Workers’ Competence Index (WCI) are developed and subsequently used to analyzefactors determining workers’ performance in the selected service sector. The results show thatworkers’ competence has significant influence towards workers’ performance. Besides that,human capital and workers’ characteristics also determine workers’ performance in the servicesector.