Unemployment rate among youths rising

According to MEF, the unemployment rate among youths is now more than 3 times the national average


The latest available figure on the unemployment rate in the country, which stood at 3.4% for June and July 2018, should not be taken lightly.

Although the figures which were revealed by the Department of Statistics recently showed a slight 0.1 percentage point drop compared to the same corresponding period last year, these are just numbers after all.

According to Malaysian Employers Federation (MEF) ED Datuk Shamsuddin Bardan, the current unemployment rate of 3.4% looks generally acceptable and is considered as full employment based on the benchmark set by the International Labour Organisation (ILO).

The ILO has stated that any country with an unemployment rate of not more than 4% is considered as full employment.

“However, the future will be more challenging with the economy facing a lot of challenges and many companies embarking on downsizing and retrenchments,” he told The Malaysian Reserve recently.

Shamsuddin said what is actually worrying is the current unemployment rate among youths.

“The rate is now more than three times the national average,” he said, adding that youths with diplomas and degrees made up a substantial portion of those being employed.

Overcoming Unemployment

However, Shamsuddin says jobseekers should not look at the entry-level salary (Pic: TMRpic)

Shamsuddin said the current economic scenario has made it very challenging for employers to create jobs, especially entry-level junior executive positions.

The situation, however, could turn around as the job market is currently experiencing a “replacement” phase.

He said employees retiring from July 2018 have begun to emerge.

“Over the past five years, employees who were supposed to retire from July 2013 received an extension of the retirement age to 60 years, and only started to retire effective from July 2018.

“There will be about 200,000 employees in the private sector retiring annually. In fact, about 100,000 employees are retiring between July and December 2018,” he said.

Shamsuddin said the drawback to this situation is that many employers are currently on cost-cutting measures and might not be replacing the retiring employees.

Echoing his statement, Asian Strategy and Leadership Institute’s Centre for Public Policy Studies chairman Tan Sri Dr Ramon Navaratnam said there is lesser job demand partly due to the global economic slowdown.

“There is also the growing mismatch between demand for jobs and the supply of suitable and market- qualified jobseekers.

“For instance, if they can’t speak proper English or have the right technical skills, how can they find jobs?” he asked.

Last Friday, a local daily reported that early childhood education degree graduates are earning Sijil Pelajaran Malaysia wages through various jobs they could afford to find.

This is just one of the many examples being reported, but what about those that are not?

Ramon said young jobseekers will have to be more creative in finding jobs.

“They would have to be jobs creators in the future. This can be done by going for start-ups.

“Most importantly, the education system has to be revamped to better meet new market demands for the different kinds of jobs available, especially those from information technology, TVET (Technical and Vocational Education and Training) and STEM (science, technology, engineering and mathematics) jobs,” he said.

Meanwhile, Shamsuddin said the 3.4% unemployment rate may be gradually reduced further by lowering the number of foreign workers and revising the category of foreigners under the IMM13 document.

“Before 2013, we had about 2.4 million legal workers and currently, we have approximately 1.8 million of them. The number may be reduced further gradually to cater for the employment of locals who are currently unemployed,” he said.

Shamsuddin also suggested that some jobs — especially the lower-end ones — should be rebranded in order to attract young people.

“For example, a sweeper position may be rebranded as an environmental assistant, while companies may introduce modern equipments to help ease the employees to perform their jobs.

“The workers will be more efficient and productive with better technologies.

“These kind of jobs could easily be done by our fresh graduates,” he said, adding that this would lead the workers to get higher wages.

According to Shamsuddin, there are about 65,000 Bangladeshis under the IMM13 category with earnings of more than RM5,000 per month.

Minimum Wage Hike Impact

The recent announcement by the government on the minimum wage increase in Malaysia has indeed become the talking point for people from all walks of life.

Shamsuddin said the higher and standardised minimum wages introduced by the government to reduce the reliance on foreign workers should be done openly.

“The higher minimum wages alone may not cause a higher unemployment rate. Higher employment may be caused by various factors affecting the economy and the labour market.

“The higher increase in minimum wages for Sabah and Sarawak, as well as the Federal Territory of Labuan, may be damaging to the labour market in East Malaysia. It may also have an adverse impact on companies’ ability to sustain and create employment there,” he said.

Shamsuddin added that investors may see no reason to invest in those states when the cost of labour is the same as that of Peninsular Malaysia.

Meanwhile, according to Shamsuddin, the service sector is forecast to be able to create and offer more job opportunities.

“For example, sales and marketing. The thing is, people are reluctant to join such fields as the remuneration is always dependent on the volume of sales.

“Furthermore, most of the available jobs are on shorter and fixed-term contracts. The unemployed are reluctant to work and accept job offers in such a field as the offered salary is too low and the position does not match his or her qualification,” he said.

However, Shamsuddin said jobseekers should not look at the entry-level salary.

“It is just a starting pay. The employers may constantly review the salary depending on the performance of the employees.

“Currently, it is difficult to secure a job that is relevant to their field of studies. As such, it is important for fresh graduates to be able to adapt on job expectations and starting pay,” he said.