"Malaysia Madani", introduced by Prime Minister Datuk Seri Anwar Ibrahim on Jan 19 this year, has six policy pillars covering sustainability, well-being, creativity, respect, confidence and courtesy.
The Labour Market definitely has a Madani dimension it. More importantly, the Malaysia Madani concept of workers aligns with the International Labour Organisation's (ILO) Decent Work Agenda which aims to create decent work, defined as productive work in conditions of freedom, equality, security and human dignity.
Having argued the above, it is time we focus on a critical issue in the labour market. Youth unemployment, a contentious issue in contemporary Malaysia, was brought into the spotlight. A feature article in Bank Negara Malaysia's 2016 Annual Report 2016, drew attention to labour market developments and policy concerns.
Contemporary Malaysian Scenario
From 2014 to 2015, the unemployment rate of Malaysia's youth (aged 15-24) rose from 9.5 per cent to 10.7 per cent, by a greater margin than the concurrent change in the national unemployment rate, which rose up from 2.9 per cent to 3.1 per cent.
The Report's observation that youth unemployment is three times that of the national rate. However, it is noteworthy that the ratio generally holds through the past decade and a half.
From 2001 to 2010, youth unemployment hovered around 11 per cent while the national rate was close to 4.0 per cent from 2011-2014, both maintained lower levels of about 10 per cent and 3.0 per cent respectively.
Putting things into perspective, young adults are more likely to be looking for work because they have just graduated from a learning institution and entered the labour market, or because they are changing jobs and being more mobile at the early stages of their work life. Therefore, there is a tendency for youth unemployment to be higher.
Whether or not the trend in Malaysia's youth unemployment rate continues to be on the rise this year, it is crucial to consider the structural barriers when resolving the problem. The Bank Negara report points out to both demand and supply issues of labour.
On the demand side, the profile of new jobs offers is not in sync (does not match) with that of new job seekers.
Between 2001 and 2015, 20 per cent of jobs created were classified as high skilled, 52 per cent as middle skill, and 28 per cent low-skilled, although half of the increase in the labour force comprised of tertiary educated workers, and the other half had secondary level schooling.
Growth of job listings on a major online job portal increased more for managers and executives than the offerings to fresh graduates. Correspondingly, wages for entry-level jobs of degree and diploma holders have stagnated.
On the supply side, some unemployment patterns among the young are cause for concern, with particular reference to employability of graduates and skills deficiency or mismatch.
Tertiary educated youth register higher unemployment (15.3 per cent) than non-tertiary educated youth (9.8 per cent).
This pattern is true in many Southeast Asian countries, including Singapore, Indonesia, Thailand and the Philippines, but the converse occurs in most advanced economies, such as Germany, Japan, the UK and France, where tertiary educated youth are less likely to be unemployed.
The report's recommendations mostly reiterate or call for expansion of various policies already in place.
Recent Socio-economic Challenges in Relation to Covid-19
Every year, about 300,000 new graduates enter the Labour Market. In 2018/2019, 100,000 new jobs were created. However, in 2021/2022, only 60,000-70,000 new jobs were created.
It seems that we are dependent on cheap, unskilled foreign labour, while many graduates remain underemployed and prefer to participate in the Gig Economy.
Of the total of 16.2 million of Malaysia's workforce, 1.9 million are considered underemployed by skill (having tertiary education but not in a profession that matches).
What is even more concerning is that only 28 per cent of our workforce consist of skilled workers. As a comparison, in OECD countries, at least 40 per cent of their workers are skilled workers.
With our economy focusing on low-cost Labour to remain competitive instead of focusing on productivity and innovation, it is no surprise that our rating based on IMD (Global Competitiveness Index) is rapidly declining. In 2010, we were ranked 10th in the world. By 2019, we fell to 22nd.
Our export has a very high import content (close to 90 per cent), meaning that not much high value added work takes place. Most of the work that is done is a mere assembly of intermediate goods.
Global Political Economic Perspectives
Looking at this issue from a Global Political Economic perspective, the recent rise of political unrest and anti-social behaviour in the world has been attributed to youth unemployment.
During the course of 2010/2011 it became a key factor in fuelling protests in the Arab World, and by the end of 2011, four regimes (Tunisia, Egypt, Libya, Yemen) fell in the wake of the protests led by young people.
Around the same time, riots and protests broke out in a number of European and North American cities. This demonstrates that the lack of productive engagement of young people in society contributes to the feeling of disenfranchisement.
Youth unemployment is also linked to emigration. Young people leave their countries in the hope of finding employment elsewhere. This brain drain has contributed to deteriorating countries' competitiveness, especially in certain European countries.
Looking back, "Young people ought not to be idle. It is very bad for them," said Margaret Thatcher in 1984.
However, official figures from the International Labour Organisation, World Bank, and the Organisation for Economic Co-operation and Development (OECD) all suggest that a quarter of the planet's youth are neither working nor studying.
The acronym NEET was first used in the United Kingdom. A NEET is a young person who is "Not in Education, Employment, or Training." A variety of causes have been attributed to youth unemployment.
Firstly, the long slowdown in the West has reduced the demand for labour, and it is easier to postpone hiring young people than it is to fire older workers.
Secondly, the existence of dysfunctional labour markets or inflexible labour market and regulations, that creates a situation of assistance and dependency.
Finally, the quality and relevance of education, which is associated with the phenomenon of graduate glut.
The current global environment exposes whatever weaknesses there are in our economic structure and makes it even more pressing for these weaknesses to be addressed and the production structure enhanced.
In the final analysis, unmistakably, youth unemployment has turned out to be a macroeconomic concern.
*The writer is a widely quoted political economic and international relations analyst. He did his graduate studies at Macquarie University and was previously attached to a leading local think tank.