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By Amirul Hamza bin Abdullah, Research Analyst Institut Masa Depan Malaysia (MASA)
Issues in the labour market, such as unemployment, are a global problem and have been for several decades, especially in Malaysia. The rise in youth joblessness has not happened across the board, and youths in some states in Malaysia have fared much better than in others. There exists a lot of discussion on unemployed youth but less on the issues or trend of youth in employment.
Throughout 2020, the country experienced sluggish economic performance, with economic regressing by -5.6%. This creates a large negative effect on wage earners, especially for new entrants to the labour markets. Average wage for youths (aged 15 to 29) has fallen to what it was 3 years ago, RM1,915. Wage growth for youths have also taken a dip, dropping from 4.6% to 3.0%. Adults have also been negatively impacted, however their reduction in wage growth is relatively minor which the growth reduced from 5.0% to 4.2% compared to the youth workforce.
Diving deeper, the number of youths in high skilled jobs is lower than adults. For example, in 2020, youths hold only 2 out of 10 high-skilled jobs, but adults hold 4 out of 10 skilled jobs. Furthermore, youth have high competition in gaining employment in higher-quality and future work. For example, in 2020, youths make up only one fifth of those employed in the information and communication sector and only 3 out of 10 in the professional, scientific and technical sub sectors.
Therefore, young Malaysians face a twofold problem: their wage growth is stagnant and they lack opportunities to work in high-skilled jobs and future sub-sectors. These challenges are making the youth more vulnerable to achieve financial independence and career path development. The government needs to take a serious initiative to resolve these issues. Youths are the future of the workforce. There are some recommendations that need to be highlighted. For starters, the government can enact policies that (i) enhance the transition from tertiary education to the workplace, (ii) foster the creation of more highly skilled jobs for youth, and (iii) increase the well-being and social capital of youths.
Investment is crucial to growth that can be shared in all people’s cycle stages, especially the young. Moreover, better education, training, and retraining can ease labour market adjustment to long-term economic transformation, especially in the age of the 4th Industrial Revolution. The lack of opportunity to achieve an excellent career path and contribute to the economy by the youth afflicts the Malaysian labour market and urgently deserves attention. Investing will not solely elude the problem and solve youth unemployment, but it also helps to push labour’s income share upwards, reversing the negative trend of recent decades. To summarise, structural and fiscal policies should promote economic conditions conducive to sustainable and more inclusive real wage growth.