Jobless youth an alarming trend

PETALING JAYA: The rising unemployment rate among youth in the country may lead to economic and social dysfunction as well as widening the income gap, which leads to restrained social mobility in the long run.
MIDF Research chief economist Dr Kamaruddin Mohd Nor told Sunbiz that the “alarming” trend would also put financial pressure on social and welfare programmes for the government to lend assistance to this group.
“Rise in social problems such as involvement in drug and criminal activities will affect the overall well-being of the society at large,” he added.
Nevertheless, Kamarudin said the country’s youth unemployment rate is comparatively low as compared to the global average, noting that youth unemployment problem is global in nature.
Last week, Bank Negara Malaysia in its Annual Report 2016 revealed that youth unemployment rate in Malaysia reached 10.7% in 2015, more than three times higher than the country’s unemployment rate of 3.1%.
The central bank said Malaysia is among regional economies with an incidence of youth unemployment in the double digits, despite a low overall unemployment rate, alongside Indonesia, which recorded the highest youth unemployment rate of 21.6%.
According to the report, youth represent more than half (61%) of the total unemployed workers, despite only making up a third of the labour force.
The data revealed that high unemployment rate was recorded among the population aged 20-24 years, that is 42% in 2015, followed by those aged 25-29 years (20.4%) and aged 15-19 years (19%).
In 2015, BNM said the youth unemployment rate increased by 1.2 percentage points from an estimated 9.5% to 10.7%, while the national unemployment rate increased by only 0.2 percentage points (2.9% to 3.1%) during the same period.
Kamaruddin said there are multitude of factors that contribute to this scenario including: uneven growth between job creation and numbers of people looking for jobs; mismatch skillset; lack of experience and skills; competitive job market (supply side – due to increased number of tertiary education institutions that produce graduates); technological advancement; and competition with foreign workers (for non-graduate/low-skill job).
He added that the availability of jobs for the number of graduates is relatively low, with a mismatch between the demand side from the industry and the supply side (graduate) in terms of field of study.
“The structure of our domestic economy is also unable to absorb new entrants into the work force,” he noted.
Meanwhile, Socio-Economic Research Centre Sdn Bhd executive director Lee Heng Guie said a mix of policies that tackle both structural and cyclical issues are required to enhance the employability of the country’s youth.
Lee said the policy framework must focus not only on skills and training development, but also labour market policies through building a functioning feedback mechanism between educational institutions and the industry.
He said policy areas include labour market training and job improvement, mentorships, apprenticeships, internships and the provision of work experience programmes, job-search and matching support, career guidance/counselling programmes as well as incentives for employers to recruit disadvantaged young people, such as wage subsidies and social security exemptions for a limited period.
“Both the policymakers, including educationists, and private sector employers need to critically address the issues of unemployment and under-employment of the Malaysian youth.
“The mobilisation of youth resources in economic and social developments not only enhances a country’s national income growth via productivity and generate economic welfare growth but also reaps enormous benefits from demographic dividend,” Lee added.