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Youths sidelined from growing economy

In the Edge Financial Daily Today 2013, 2 December 2013 - With full employment and youth joblessness lower than the global rate, Malaysians may find reasons to disregard what bedevils much of the rich world.

Yet while they may be better off than their foreign peers, Malaysian youths are not benefiting fully from the good times they live in.

This is because in Malaysia, they are 7.4 times more likely to be unemployed than adults, up from 6.6 times in 2011, one of the highest ratios in the world.

The ratio is based on a 2012 youth unemployment rate of 10.3% and an adult unemployment rate of 1.4% in Malaysia.

This compares with youths in other parts of the world who are 2.7 times more likely to be jobless than adults, according to the International Labour Organisation (ILO).

In Southeast Asia and the Pacific, youths are 5.3 times more likely to be unemployed; in the developed economies and European Union, they are 2.3 times more likely to be unemployed. Youths are defined as those between15 and 24 and are in the labour force.

Matthieu Cognac of ILO told The Edge Financial Daily that the high statistics are partly a symptom of economic growth.

“Young people are always the last in and first out. In times of economic growth, employers prefer to hire more experienced and therefore older workers; and in times of crisis, the young are cheaper and the first ones to be let go,” he said.

But he added that the statistics might also underscore structural problems that leave young jobseekers behind.

“There is a double-skill mismatch. The first is between supply and demand: people are not trained for jobs that are available in the
market; the second is between jobs available and jobs sought by young people, which reflects the issue of over and under-education.”

The opposition has quoted figures on the mismatch: 75,800 graduates are jobless, 24.6% of graduates cannot find a job six months after graduation, and 21% of employed degree holders are working jobs that do not require a degree.

However, Malaysian Trade Union Congress president Mohd Khalid Atan said the fundamental issue is not so much youth unemployment, but the oversupply of foreign labour in Malaysia.

“Youths with fewer years of education are one of the main groups afflicted by excessive migrant workers. Our youths should be filling in jobs taken up by migrants, who are depressing wages to levels locals would not work for,” Khalid said.

“The government has lost control of the supply of migrant workers. By our estimates, there are as many undocumented workers as the two million documented ones.”

MIDF Research’s Maslynnawati Ahmad agrees that Malaysia’s overdependence on foreign labour puts unskilled youths at a disadvantage and said, “There are not many low value-added jobs left as companies relocate to cheaper locations overseas.”
Another economist, however, said that the oversupply of foreign labour is more an effect than a cause of our youths’ reluctance to accept low-skill jobs.

“There has been a shift in the mindset of youths. We did not have this problem in the 70s to the 90s. During the 1985 recession, many
graduates willingly took a pay cut to go into farming and teaching,” he said.

The consequences of prolonged youth unemployment are severe. The International Monetary Fund warned of a “scarring effect,” where those who experience unemployment early in their lives are more likely to be unemployed again in later years and to earn less over their working lives.

Cognac warned of social consequences too, such as an increase in crime and unrest.

Malaysian Employers Federation executive director Shamsuddin Bardan said the federation is working with the government to introduce certification under the Malaysian Skills Certificate for on-the-job training, especially training provided by SMEs which make up 98% of employers.

Currently, only 28% of employees in Malaysia carry certification. MEF targets 50% by 2020.


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