Youth Unemployment Expected to Worsen

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SOME ECONOMISTS BELIEVE that the ongoing economic crisis set off by the Covid-19 pandemic can rival the 1929 Great Depression. In Malaysia the national unemployment rate rose to 3.9% last March, coinciding with the start of the Movement Control Order (MCO); and in the coming months, the Malaysian Employers Federation (MEF) believes that about 2 million citizens could potentially face retrenchment.

Youths are among the most vulnerable groups. To discuss the question, the organisation Research for Social Advancement (REFSA) and UNDI18 jointly hosted the webinar titled Post-COVID-19: What lies ahead for Malaysian Youths? last May. The panellists were former CEO of Talentcorp Shareen Dato Abdul Ghani; assistant professor of Economics at the Asia School of Business Dr. Melati Nungsari; and research associate at the Khazanah Research Institute (KRI) Mohd Amirul Rafiq Abu Rahim.

Youth (Un)Employment Pre-Covid-19

“Even before the pandemic, the transition from school to work was already challenging,” observes Amirul. He adds that since 2015, Malaysia’s youth unemployment rate has exceeded 10% and that the influx of fresh graduates had saturated the job market.

This leads to young jobseekers having to lower their expected salaries in order to secure employment. According to a KRI study, high income was no longer the foremost concern for fresh graduates. In fact, this runs contrary to employers’ grievances about Malaysian youths’ “unrealistic wage expectations”.

“Youths should not be described as choosy about employment since most are actually overqualified for their current jobs,” says Amirul, alluding to the skills mismatch between young jobseekers and the labour market today. He adds that more than 50% of informal sector workers, including those in temporary, part-time and casual employment, are between the ages of 15 and 34. “Adding to this, we have to acknowledge that the informal sector offers limited access to labour and social protection.”

Malaysian youths also perceive foreign workers as competitors for opportunities, even if they themselves tend to shun blue-collar or 3D (dirty, difficult and dangerous) jobs. Interestingly, at the same time, Malaysians do commute to Singapore for such jobs, “motivated mainly by higher wages”.

Gloomy Prospects

Both Amirul and Shareen anticipate youth unemployment to worsen further. “The market will be tightened and wage suppression is to be expected as employers freeze recruitment and implement cost-cutting measures,” Amirul explains.

The federal government has been actively seeking public-private collaborations to create jobs opportunities for new entries into the labour market. “But with this crisis, the private sector is unable to plan beyond their current cash flow,” says Shareen.

"Youths should hedge against  uncertainties
by keeping all options open, even if
it means becoming gig workers.”

She also raises the uncertain fate of the Malaysians@Work initiative, which was mooted by the then-Pakatan Harapan government to provide up to 350,000 jobs for citizens. “Let’s be honest, creating a large number of jobs at this stage is not feasible.”

However, young jobseekers are urged to take short-term measures to overcome the “Covid-19 hump”. “No one can tell you for certain what will happen in the future. What we do know is that the economy will worsen before it gets better. Youths should hedge against uncertainties by keeping all options open, even if it means becoming gig workers,” advises Dr. Melati.

Danger and Opportunity

Elaborating on the concept of wēijī, the Mandarin word for crisis that combines the characters for danger and opportunity, Shareen encourages youths to leverage on their technological proficiency when seeking employment. “There are sectors with growth potential. Digital tech and e-commerce companies are always on the look-out for tech-savvy youths.” Global Business Services and outsourcing sub-sectors are still recruiting as well, she adds. The challenge now is to encourage young jobseekers to consider these sub-sectors.

The prevalent mentality of employers who emphasise academic qualifications over actual skillsets is another stumbling block. The panellists point out that this obsession with certificates has contributed to the skills mismatch among youths. “Unfortunately, employers still look at which university you graduate from, and that’s the starting point of how you get recruited. This rationale needs to be updated,” says Shareen.

The Way Forward

The three panellists also urge young Malaysians to make use of the economic downturn by upskilling. Improving one’s own skillsets enables career advancement and upward social mobility. “Use this time to upgrade your skills. You need to understand where the growth is and prepare yourselves accordingly,” says Shareen.

To that end, Amirul suggests that the federal government resume apprenticeships and training programmes such as the National Dual Training System for fresh graduates and interns. “Of course, fair wages and training allowances are crucial to ensure that the youths are able to survive and finance their daily expenses.”

“This is an ideal time to pad your resume,” agrees Dr. Melati, adding that tertiary institutions have been introducing more online courses during the pandemic. Besides upskilling and apprenticeships, she also highlights entrepreneurship as a viable option for youths.

Briefly delving into her academic background in the US, Dr. Melati recalls how the curricula of the Massachusetts Institute of Technology (MIT) inspired her to advocate entrepreneurship among Malaysian youths. She subsequently adapted the MIT model for the Rapid Youth Success Entrepreneurship programme, which is sponsored by Citi Foundation and has trained over 600 participants to date.

“Youths from lower income households tend to turn to entrepreneurship, not just out of necessity, but to solve problems in their own communities as well.”

How Should the Labour Market Be Reformed?

Where job market reforms are concerned, Shareen proposes that the scope of existing labour laws should be broadened to provide protection for gig workers. She adds that a social safety net that ensures the welfare of gig workers can facilitate in widening the gig economy further. “Regardless of whether you are in the formal or informal sector, you are still contributing to the nation’s growth.”

For his part, Amirul concedes that while structural reform of Malaysia’s labour market may be difficult to achieve, “we cannot run away from creating jobs in high-value industries.” He also calls for a review of the nation’s policy on cheap labour. “Malaysia’s adoption of technology, productivity growth and the drive towards high-income status have been constrained by our continued reliance on cheap labour.”

Quoting anecdotal information from a food delivery firm that “up to half of the F&B outlets are projected to close within the next two months”, Dr. Melati says the government needs to step in to help private companies retain their employees. “At least cushion the economic impact so that they don’t have to lay off half their workforce.”

She contends that federal policy-making has been deeply flawed, and that this is due to insufficient official data. “How can you implement a good policy if you don’t actually know what you’re dealing with? One thing that would really help is to make labour market information available and accessible to all.”

Notwithstanding any possible government intervention, Malaysia’s youths are facing tremendous hardships in reimagining their futures and securing their livelihoods post-Covid-19. The pandemic has exposed underlying weaknesses in the country’s labour market. Young jobseekers will bear the brunt of this economic crisis, and it is imperative that they are adaptable and invested in self-improvement.

Ooi Tze Xiong, a former Xaverian, currently works at a multinational firm at Bayan Lepas. After years of sojourning in cities across Malaysia and Singapore, he eventually decided to call Penang home.

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