The development of quality human resources is the focus of the Government Transformation Plan (2010). Thus, it is estimated that organizations and institutions spend a large amount of money on workforce training annually. In general, however, less than 20 percent of the knowledge and skills acquired in training are actually applied in workplaces (Devos et al. 2007; Leimbach 2010). This leads to a limited application of new skills and results in the loss of funds invested in training programs, and could also contribute to the mismatch between job preparation and labour market needs.

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In the 10th Malaysian Plan 2010-2015, the Government of Malaysia emphasized the mainstreaming of vocational education in its pursuit to transform Malaysia into a high-income developed nation by 2020. To achieve this vision, Malaysia needs more skilled and semi-skilled workers to become knowledge workers (k-workers). The 9th Malaysian Plan indicates that only 28 per cent of the populations in Malaysia are highly skilled workers. To meet the emerging skill requirements for k-workers, vocational education needs to be transformed to equip trainees with requisite skills. Past studies show that in Malaysia there is a gap between the skills learned in training institutions and skills required by employers. However, there are no studies and no model that explores the development process of employability skills in training institutions and the industry. To address this issue, we used a mixed research method (e.g. questionnaire, employability skills survey and grounded theory) to explore the formation of skills in training institutions. The results showed a high level of employability skills among trainees but also the need to consider a number of supporting factors to ensure that skills learned can be applied in the work context.

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