The Institute for Strategic Analysis and Policy Research (INSAP) has released two studies this month titled “The Looming Challenge: Youth Unemployment and it’s Political Implications” authored by Edwin Oh Chun Kit and “Youth Underemployment in Malaysia: Factors and its implications on Malaysia’s growth and future”, authored by Jason Leong Han Zhong.
The first report, “The Looming Challenge: Youth Unemployment and it’s Political Implications” embarks on an exploration of the pressing issue of youth unemployment in Malaysia. This report uncovers the underlying patterns that vary with demographics, critical factors that contribute to the elevated rates of youth unemployment, an examination of youth influence which draws parallels with the Arab Spring movement as an example where it is then contextualized within the Malaysian landscape which takes into account youth unemployment and its potential political repercussions.
Malaysia, akin to other Southeast Asian and Pacific nations, is wrestling with youth unemployment. The unemployment rates for individuals aged 15-30 are nearly double the national average, with degree holders experiencing a high rate of 11.4% in 2022. The study also suggests a potential correlation between unemployment and state development.
Youth unemployment in Malaysia is a complex issue, influenced by factors such as overlooked urban youth segments, aggregate demand and a structural mismatch in the labor market. “Statistics show that nearly half of the graduates are in jobs not requiring a degree, due to a lack of high-skilled jobs and deficiencies in the education system” highlights Edwin Oh. This underscores the need for systemic reforms. Drawing upon the influential role of youth in the Arab Spring movement, it becomes crucial to address pressing issues like unemployment that significantly impact this demographic. For Malaysia, youths represented the largest electoral bloc with a high voter turnout of 75.6% in the 15th General Election (GE15). Furthermore, in seven state constituencies, younger voters constituted over 40% of the vote share.
Hence, overlooking concerns of this large voting bloc brings about the risk of adversely impacting electoral outcomes. The political implications are evident, prompting the need for comprehensive reforms and solutions. If the youth unemployment figure continues to rise, and more importantly, the number of unemployed youths, which stood at 439,600 as of October 2023, continues to increase – what does the government expect young voters to think at the ballot box?
The second report, entitled “Youth under-employment in Malaysia: Factors and its implications on Malaysia’s growth and future” conducts an in-depth examination of the trend of youth underemployment in Malaysia over the years. This comprehensive analysis delves into the multifaceted factors contributing to this issue, the implications it holds for the nation, and the economic impacts it engenders. The report further provides a balanced perspective by offering recommendations from both the demand and supply sides, thereby presenting a holistic view of the situation. Youth underemployment, not to be confused with unemployment represents people working in a job that does not match their skills or qualifications, often meaning they earn less than what they should
In Malaysia, 2.9% of youths were time-related underemployed while 33.9% were skill-related- underemployed in 2021. The proportion of underemployed youth has remained largely unchanged from 2017 to 2023 but the nominal numbers show an uptrend which suggests a need for reassessment of intervention strategies. In 2022, 28.7% of graduates started with monthly earnings below RM1,999. Along with the creation of only 12% high-skilled jobs annually from 2010 to 2019 on average, career and wage growths are limited. High saturation of higher-skilled graduates in medium to low skill jobs will intensify competition, further suppressing wages.
What are the consequences of a delayed action to this pressing issue? Brain drain will occur, which inevitably leads to a depleting pool of skilled human capital and talent. With this, Malaysia’s economic productivity will be affected which adversely impacts Malaysia’s advancement in the Fourth Industrial Revolution era. “Ultimately with the low undeserved wages, poverty and debt levels will rise, further aggravating the nation’s widening income inequality” warns Jason Leong.
To tackle this, we propose urban decentralization and reindustrialization. This includes developing special economic zones, promoting rural and peri-urban industrial parks as well as adopting technology to create high-skilled jobs. Additionally, reshaping public perception of TVET, improving instructor competency, reorganizing the TVET system and integrating it with the MYFutureJob platform are necessary for enhancing skill development.
In conclusion, while unemployment and underemployment are distinct issues, particularly prevalent among youth, both demands equal attentiveness. INSAP calls for both youth unemployment and youth underemployment to be given due attention by the relevant ministries and government agencies. A comprehensive roadmap must be developed to address the problem – lest the government finds comfort in tackling unemployment when it removes the statistics from one column to pile up another column.
