5-3-2024 (KUALA LUMPUR) As Malaysia basks in the glow of its economic resurgence, with tourists flocking back and investments pouring in, a sinister undercurrent threatens to disrupt the nation’s hard-won progress. Beneath the veneer of rosy data and robust domestic demand lies a looming crisis that demands immediate attention: the specter of youth unemployment.
Just before the Chinese New Year festivities, the Department of Statistics Malaysia unveiled its labour report, painting a picture of an unemployment rate holding steady at 3.3 percent in December 2023, with employment figures on the rise across all sectors. However, a closer examination of the youth unemployment figures tells a starkly different tale – one that should sound alarm bells throughout the corridors of power in Putrajaya.
As of December last year, a staggering 307,200 young Malaysians aged 15 to 24 found themselves without employment, representing an unemployment rate of 10.6 percent. Broadening the lens to encompass the 15 to 30 age bracket, the situation becomes even more dire, with 432,100 youths languishing in joblessness, equating to a 6.4 percent unemployment rate. Alarmingly, these youths account for a whopping 76 percent of the 567,800 individuals who are currently without jobs in Malaysia.
Adding fuel to the fire is the impending influx of 5 to 6 million students set to graduate this year, poised to exacerbate the already strained job market. Compounding the issue further is the sluggish pace of job creation in 2023, making the prospects for young Malaysians seeking to enter the workforce even more challenging.
The social, economic, and political ramifications of youth unemployment cannot be understated. This is not merely a cyclical issue; the problems and flaws are deeply entrenched within the very fabric of the system itself, necessitating structural reforms to achieve lasting change.
One of the most pressing concerns is the potential for a debilitating brain drain, as persistent youth unemployment could drive skilled locals to seek greener pastures overseas. An estimated 5.5 percent of Malaysians already choose to work abroad, a figure higher than the global average of 3.3 percent, according to former Human Resources Minister V Sivakumar. A recent study by the Department of Statistics Malaysia revealed that three-quarters of Malaysians employed in Singapore were skilled or semi-skilled, with the highest earner drawing a staggering gross monthly salary of S$18,000 (approx. RM58,500).
The allure of higher wages is further amplified by the ringgit’s record-breaking decline, translating into enhanced purchasing power for Malaysians working in Singapore. This alarming trend, if left unchecked, could precipitate a catastrophic brain drain, robbing the nation of its most valuable resource – its talented youth.
Beyond the economic implications, the specter of youth unemployment poses a grave threat to political stability and social cohesion. In the wake of Malaysia’s 15th General Election, where the minimum voting age was lowered from 21 to 18, young voters emerged as the largest electoral bloc, with a robust 75.6 percent turnout among the 18 to 30 age group. Notably, the estimated voter turnout for those aged 18 to 20 was an impressive 79 percent, among the highest participation rates in the election.
The potential for this demographic to sway close elections cannot be overstated, and their frustrations and unmet needs, if ignored, could ignite a firestorm akin to the pro-democracy uprisings that swept across the Middle East and North Africa during the Arab Spring – a movement fueled by widespread youth unemployment and disenfranchisement.
The ASEAN region has witnessed similar rumblings, from Thailand’s “lost generation” of young voters demanding transformation, particularly regarding the monarchy, to the support garnered by Indonesia’s opposition Move Forward Party, led by young leaders vowing change, in last year’s presidential election.
With such high stakes at play, one cannot help but ponder: What is Malaysia doing to address this ticking time bomb? If youth unemployment figures continue their upward trajectory, what can the government expect young voters to think come the next election? Will potential disillusionment ignite a demand for sweeping change? The party that offers practical solutions, rather than empty promises, will undoubtedly earn the trust and mandate of Malaysia’s youth.
Numerous polls have consistently identified economic worries as the primary concern for young voters, specifically addressing the escalating cost of living and the challenges of home ownership. In recognition of these economic anxieties, the government will pilot a progressive wage policy in June, aimed at improving the income of low-income workers in Malaysia. Inspired by Singapore’s Progressive Wage Model, this initiative outlines a multi-year salary increment schedule for workers, contingent upon their acquisition of skills.
However, the efficacy of this policy in addressing Malaysia’s skills mismatch remains to be seen. Questions have been raised about the potential impact on the nation’s labour market, given the voluntary nature of the initiative, the lack of a strong tripartism tradition in Malaysia, and ambiguity surrounding the inclusion of foreign workers.
With the growing number of graduates entering the labour market each year, Malaysia must also prioritize the development of a robust transition support system that prepares young people for the job market, rather than merely equipping them for yet another examination. According to a report last year, more than 187,000 graduates remained unemployed in 2022, while a staggering 40.5 percent were underemployed in semi-skilled and low-skilled occupations.
Vocational education could potentially bridge the education-industry gap, but internal reforms are crucial. For Malaysia, this entails addressing issues such as instructor competency (qualifications, industry experience) and the fragmented landscape of independent providers with varying standards. Public perception must also be reshaped, as vocational education graduates are often associated with lower-paying blue-collar roles.
It is important to note that Malaysia is not alone in grappling with the scourge of youth unemployment. Globally, the youth unemployment rate is estimated at a concerning 15.6 percent in 2021, according to the International Labour Organization. China, for instance, has previously witnessed its youth unemployment rate climb to record highs of more than 20 percent. Southeast Asia and the Pacific exhibit particularly troubling rates compared to global averages when considering the youth-to-adult ratio of unemployment.
Framing youth unemployment as solely a Malaysian problem is thus limiting; it is a regional challenge that warrants a regional solution, with other ASEAN countries facing similar struggles. Moving forward, Malaysia must strive to abandon the low-skill, low-wage strategy that has long defined its economic approach. While this strategy has enabled the nation to attract companies seeking cheap labor, it perpetuates a negative perception and hinders Malaysia’s true potential.
The global geopolitical landscape is shifting, and ASEAN has the opportunity to emerge as a force in this new world order. However, for Malaysia to seize this opportunity, it must invest in its youth, equip them with the requisite skills, and champion innovative ideas. Failure to do so could unleash a tidal wave of social, economic, and political instability that could derail the nation’s hard-won progress.
