Labour Market Imbalance

Malaysia’s economy is not producing enough skilled jobs and the trend has yet to show a positive sign, according to a study by Khazanah Research Institute (KRI).

The study titled “Limited Skilled Jobs Opportunity” produced by KRI researchers Hafiz Hafizi Suhaimi and Hawati Abdul Hamid revealed that the percentage of the total skilled jobs in Malaysia between 2015 and 2022 stands at 25%. Semi-skilled jobs, on the other hand, are dominating the market with 61% for the same period of 2015 to 2022. The distribution of new skilled jobs is declining from 49.8% in 2016 to only 29.5% in 2022. The lack of skilled job creation is being compensated by semi-skilled jobs, which saw an increase from 43.2% to 60.8% in the same period.

The study also revealed that there are more graduates produced by universities each year to the point that the figure does not match the number of skilled jobs that exist in the country.

Between 2015 and 2022, there were about 300,000 graduates each year, but the creation of skilled jobs was only 55,000 yearly during the same period. The total number of new graduates in the workforce increased from four million in 2015 to 5.2 million in 2022, while the total skilled jobs only increased from two million in 2015 to 2.2 million in 2022.

Based on a recent KRI report titled “Shifting Tides: Charting Career Progression of Malaysian Skilled Talents”, it was revealed that despite various efforts by the government, its target for creating skilled jobs could not be met. At present, the service sector dominates the workforce at 51.6% between 2015 and 2022, followed by the manufacturing sector at 42.8% for the same period.

With the limited number of skilled jobs, the study revealed that some youths would prefer to skip attending universities and go for high-paying jobs that do not require a degree. Youths believe that higher education is not bringing added value to them since they are looking for respectable salaries. Statistics seem to be aligned with this conclusion, as skills-related underemployment statistics in 2023 show almost four out of every 10 employed graduates are in jobs that do not match their qualifications.

The number of graduates who are in informal jobs also increased, from 8.6% in 2013 to 15.8% in 2023. The gig economy and being an influencer are among the attractions to this sector. Additionally, they said other contributing factors include graduates choosing courses that are not in line with industrial requirements. There are more graduates in the fields of social sciences, business and law compared to graduates with technical skills such as engineering, manufacturing and construction.

We talk of STEM, but the reality is there are not enough jobs that require STEM. Unless, the Government steps up in R&D, it will not progress. The universities are not doing it; many are more interested in producing some fake research reports. The best is to have a collaborative cluster/hub with the private sector which is driven by private initiative as in South Korea, Singapore or the U.S.

Reference:

Labour market imbalance, Arfa Yunus, The Star, 7 April 2024