The Malaysian youth labour market: Challenges, mismatches and misperceptions

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Khazanah Research Institute (KRI) released its ‘School-To-Work Transition of Young Malaysians’  Report based on an extensive survey of young Malaysian men and women aged 15 to 29 years in the education system and the job market. The Report was launched by Datuk Shahril Ridza Ridzuan, Managing Director of Khazanah Nasional. The survey, which covered youth in upper secondary and tertiary education, young job seekers, young workers as well as employers, revealed several challenges, mismatches and popular misperceptions.

Today’s youth represents the country’s best educated generation, yet they face a number of difficulties making the transition from school-to-work. In 2017, youth aged 15 – 24 years accounted for 56.4% while those aged 25 – 29 years accounted for another 21.1% of the total unemployed.

The report found that the educational and training institutions are not producing the kinds of graduates employers are looking for. Employers prefer soft skills and work experience above academic or professional qualifications that are emphasized by schools and universities. Furthermore, the supply of young workers with technical and vocational education and training (TVET) or with STEM qualifications (Science, Technology, Engineering and Mathematics) is far short of employer demands.

Another mismatch relates to entrepreneurship skills. Although the government has been encouraging young people to create their own jobs rather than to look for jobs, the report notes that they want to be employees working for others rather than starting their own business. Youth do not appear to recognise the importance of entrepreneurship skills and they are also not aware of government incentives and supports for micro and small enterprises.

KRI’s findings also dispelled a number of common perceptions – importantly, that young people are ‘choosy’, have unrealistic wage expectations and ‘are asking for too much’. The report argues that youth should not be considered ‘choosy’ when most in unskilled and low-skilled jobs are ‘over-educated’ and their current jobs are not related to their level or field of education. Their reservation wage below which they would refuse a job offer and their actual income earned are not unrealistic compared to prevailing rates. The report also noted that employers identify high income as what youth most want out of a job but young people emphasize job security and work-life balance. High income is only fourth in the youth list of job priorities.

Contrary to a common belief that young people do not want the jobs done by foreign workers, the survey found that they see foreign workers as a threat to their job opportunities. They want the high-skilled expatriate jobs and when they do not want migrant jobs it is not just because these are dirty, difficult and dangerous (3D) jobs but because of the low pay compared to what they could earn for similar jobs in Singapore.

The report highlighted the changing patterns of youth employment. More and more young people are going into temporary, part-time, casual, zero-contract work. They are doing gig work, freelance work, crowd work all made possible by the spread of the internet. These new types of jobs that did not exist in the time of their parents offer greater opportunities for the digitally savvy young people. But these are jobs with limited access to social security and health insurance and often involve work-related stress due to unstable incomes and job insecurity.

“It is important to learn from young men and women themselves what they want out of life and work, how the education and training systems are equipping them for employability and how they fare in their job search and their working conditions – because it is the human resources of the young that will determine Malaysia’s advancement into high-income status,” said Dr. Lim Lin Lean, lead author and Visiting Senior Fellow at KRI.

She explained that the report provides policy implications and options arising from these findings that can be used to stimulate discussion and identification of appropriate measures to enhance the employability of youth and the more effective functioning of the labour market.

Launch of the School-To-Work Transition Survey report by Khazanah Research Institute.
From left, Mohd Amirul Rafiq, Research Assistant, Junaidi Mansor, Director of Research, Datuk Hisham Hamdan, Chairman of Executive Committee of Khazanah Research Institute, Datuk Shahril Ridza Redzuan, Managing Director of Khazanah Nasional Berhad, Dr Lim Lin Lean, Lead Author and Senior Visiting Fellow of Khazanah Research Institute, Nur Thuraya Sazali, Research Assistant and Dr Nungsari Ahmad Radhi, Board of Trustees, Khazanah Research Institute.

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