21 February 2024

Rethinking youth and unemployment

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By: Dr. Rulia Akhtar

Youth are without a doubt one of the most potent forces and resources a country can possess to advance its social and economic development. Youth are numerous, but they are also full of energy, bravery, and innovative ideas that, if well-coordinated and incorporated into national economic activities, can change social and economic development. Despite its significance, youth still face a number of difficulties, with unemployment being one of them. One of the biggest issues facing both developed and developing nations worldwide is youth unemployment. Governments around the world are increasingly aware that high rates of youth wage stagnation can have negative and far-reaching effects on the growth of the global economy. A substantial body of research indicates that being unemployed while young, particularly for longer periods of time, may have long-term detrimental effects on future earnings and employment prospects, as well as a negative impact on the jobseeker’s mental health and level of happiness. Youth unemployment, defined as that of those between the ages of 15 and 24, was about 13% worldwide, or approximately three times that of adult people. Although the performance of Southeast Asia and the Pacific region is marginally better in real terms, underemployment is well almost six times higher than that of adults in these regions.

In Malaysia, this issue is also urgent. Malaysia had the ASEAN’s third-highest young unemployment rate in 2018, after only Indonesia and the Philippines, but it was still 10.9% lower than the regional average of 12.2% for Southeast Asia and the Pacific. In Malaysia, youth unemployment rose from 3.26% in 2019 to 4.61% in 2021. In order to reduce the severity and perseverance of youth redundancy, local policymakers are stepping up their efforts, aware that as Malaysia climbs the development ladder, future economic growth will increasingly depend on increases in efficiency. Furthermore, as technological progress advances, it is becoming increasingly important to concoct the nation’s youth for future labour demands.

Young people have trouble finding employment because they lack the necessary skills. They also lack the connections, knowledge, and resources necessary to learn the pertinent or appropriate skills, particularly for young people from low-income families. Another factor is the growing percentage of Malaysian youths who, particularly in countryside, fall into the “not in education, employment, or training” category and are therefore excluded from various initiatives to combat youth unemployment. Malaysia’s high youth unemployment rate of 10%, according to Economy Minister Mohd Rafizi Ramli, is primarily due to a persistent mismatch between the trained talent produced by local training institutions and the real skills in demand by the market. Numerous factors, according to recent statistics, contribute to youth redundancy in Malaysia. The Ministry of Finance (2019) claims that “the lack of work experience, skills, education levels, and skill compatibility” to compete in the labour market are the main causes of youth unemployment. In order to solve the issue, the following suggestions are made:
First, facilitating job matching and creating a stable, welcoming environment for young workers would be a more long-lasting solution to the problem of youth unemployment. Therefore, by developing contemporary markets for all Malaysians to increase their competitiveness, whether in urban or rural areas, the government can facilitate job matching and absorbing youths into the labour market.

Second, the government needs to help young people find jobs that are more secure, pay fairly, and match their qualifications. Technical and vocational education and training (TVET) is essential to bridging the skills gap. In order to reduce youth unemployment, TVET should be effective and provide plenty of opportunities for local talent to upskill and reskill in order to fit the current job market and applications.
The third point is that entrepreneurship is a potent weapon against youth unemployment. Entrepreneurs is the drive of wealth generation through the creation of innovative techniques or solutions. Companies should encourage this type of thinking by providing employees with the opportunity to experiment with new ideas as well as the resources to put those ideas into action.

Fourth, helping young people enter the workforce is one of the world’s most urgent development challenges today. By fostering the growth of tomorrow’s skilled workforce, on-the-job training for young employees benefits both the youth and the long-term success of the company. Greater diversity and inclusion are made possible by better work, which closes the gap between education and the labour market.

Fifth, mismatched skills can result in lost opportunities for productive transformation and job creation by raising unemployment and lowering competitiveness and investor appeal. As a result, public or private resources are allocated to training under the presumption that acquired qualifications will result in increased wages or employment.

Last but not least, to support rural livelihoods and assist those in the informal economy in transitioning to the formal economy, the government should also think about creating programmes for youth in rural areas that are focused on job creation and skill training. The instability that young workers experience in industries like manufacturing, the gig economy, wholesale and retail trade, lodging and food services, and hospitality is another issue. In this case, the government should stop providing direct financial incentives and instead focus on bolstering the social safety net.

The author is a Research Fellow at the Ungku Aziz Centre for Development Studies (UAC), Universiti Malaya