Give attention to underemployment issue

THE current unprecedented twin crises – health and economic – have cost many lives and livelihoods across the world and Malaysia is not spared. One of the main challenges is the underemployment of graduates.

Underemployment is different from unemployment. People who are underemployed are classified as those with high skills but work in low-paid or low-skilled jobs. This can also be referred to as “graduate mismatch” – the supply of graduates does not go together with the demand in the job market.

The heavy blow caused by the Covid-19 pandemic will worsen the underemployment situation in Malaysia because many people have been let go by their employers through retrenchments or voluntary separation schemes.

It has become harder for graduates to get jobs because times are really tough for everyone. They will have to search for other avenues to earn a living and a higher underemployment figure is possible this year.

According to the classification given by the Social Security Organisation (Socso) of graduate and non-graduate jobs based on qualification levels, jobs for graduates (diploma and degree holders and above) should ideally be within the skilled jobs category, also referred to as the PMET jobs (professionals, managers, executives and technicians).

Non-graduate jobs which are referred to as semi-skilled or low-skilled jobs include clerical support, service and sales, craft and related trade.

It could be a relief to see higher graduate employment as a whole with the increase of 342,900 persons from 4.9 million in 2018 to 5.3 million in 2019. The employment in PMET jobs also rose by 6.1% year-on-year (y-o-y) in 2019, higher than the 5.6% y-o-y in 2018.

Nonetheless, the number of graduates who are being employed for jobs lower than their qualification levels has also picked up. Of the total employed graduates, the share of those in the semi-skilled occupations has been rising between 2016 and last year, from 22.1% to 25.6%.

The absolute number of graduates who are in the semi-skilled jobs rose from 990,000 to 1.1 million last year – a 9.3% y-o-y expansion.

On average, between 2016 and 2019, 74.9% of jobs were created for graduates in the skilled segments matching diploma and degree qualifications. But 25.1% of the job creations for the graduates were in the lower-skilled occupations.

This figure, albeit lower than the share of those in skilled jobs, suggests that there is still a mismatch in the labour market for graduates.

Even the weekly vacancies on MyFutureJobs portal as of Oct 9 showed that the top 10 occupations are dominated by non-graduate jobs, especially factory workers (26,772) and sales assistants (22,076).

The number of degree and diploma graduates is increasing over the years but the industry demand is not catering to them sufficiently as more low-skilled jobs are being offered.

This has led to an under-utilisation of valuable human capital and the graduates are not paid the right amount of wages, hence causing an unequal distribution of income.

For instance, using the median wage classification by Socso, there is a huge gap of RM1,000 between a graduate holding an executive role (a graduate job) and a clerical support worker (a non-graduate job).

This calls for serious attention as graduates will keep on coming into the labour market and if not addressed efficiently, this structural issue will prolong.

It is not only about creating the right jobs but also providing the knowledge of the right education and skills that graduates need to stay competitive in the job market.

It needs cooperation between stakeholders such as the government and industry players. Strong political will should also exist among leaders to do what’s best for the rakyat.

Perhaps we can learn from the successful cooperation between SkillsFuture and Workforce Singapore in helping Singaporeans make well-informed decisions in terms of education, training and career, relevant to the changing industrial needs.

It is not easy to handle the underemployment issue during times of crisis as everyone tries to survive through whatever means, but this matter needs to be looked into sooner or later.

Sofea Azahar is research analyst at EMIR Research, a think tank focused on strategic policy recommendations based on rigorous research.