INTERACTIVE: How the jobs mismatch may derail Malaysia’s drive to become a high-income nation

Persistent underemployment an indication of serious structural issues within the economy, say experts

 

By SHYAFIQ DZULKIFLI and REBECCA RAJAENDRAM

 

PETALING JAYA: Aza*, 33, is barely making minimum wage as an administrative assistant in Raub, Pahang.

"I'd probably make between RM2,300 to RM2,500 working in Kuala Lumpur, but in a small town, I earn about RM1,500 per month.

"I have a business administration degree, but getting a higher position that matches my skill level is hard. So I take what I can get,” she said.

Aza is among the country's many underemployed talents – skilled workers who are settling for semi-skilled jobs because they are overqualified for the positions available.

Skilled workers, according to the Malaysia Standard Classification of Occupation (Masco) 2013, are those possessing high skills, such as managers, professionals, technicians and associate professionals.

Semi-skilled workers are the clerical support workers; service and sales workers; skilled agricultural, forestry, livestock and fishery workers; craft and related trades workers; and plant and machine operators and assemblers.

Jobs under the low-skilled category are elementary occupations.

There are more semi-skilled jobs being created nationwide compared with skilled ones, according to the latest data from the Statistics Department.

Despite decreasing unemployment numbers, underemployment has been steadily rising, with  most underemployed individuals comprising youth between the ages of 24 and 34.

Since May 2022, the gap between the number of semi-skilled and skilled jobs being created has been steadily increasing, before peaking in the first quarter of last year. 

 

At that time, there were 11,610 more semi-skilled jobs created than skilled jobs.

 

As of December last year, only 8,590 skilled jobs were created, compared with more than 19,000 semi-skilled jobs opening up.

 

The lack of skilled jobs has led to more people with a tertiary qualification, like Aza, working in semi-skilled or low-skilled jobs.

 

 

While the most underemployed individuals come from the 24 to 34 age bracket, those between the ages of 15 and 24 recorded the highest skills-related underemployment.
 

 

 

Oversupply of talent

An oversupply of skilled people, according to a recent Khazanah Research Institute (KRI) report, is forcing graduates to accept jobs outside their field of study or below their level of qualification, with low starting pay, or nonstandard employment such as part-time or contract jobs. 

 

“The urgency lies within a saturated supply of tertiary-educated workforce against the deteriorating returns to higher education investment and lack of fulfilling career opportunities in the labour market, the Shifting Tides: Charting Career Progression of Malaysia's Skilled Talents report read.

 

Produced in collaboration with the Higher Education Ministry, the 220-page report identified persistent underemployment among skilled talent as an indication that there are more serious structural issues within the economy.

"There is a scarcity of high-skilled jobs in the Malaysian market.

“Analysis on fresh graduates also noted this lasting issue over the past decade. 

“Notably, overqualification remains prevalent among graduates even after they have worked for more than five years. 

“This, in turn, highlights the urgency to create more quality jobs and other promising career opportunities in the labour market,” KRI said in its report.

The problem
 

The boom in semi-skilled jobs, said Sunway University economics professor Dr Yeah Kim Leng, could be due to the post-pandemic recovery demand in low-and-medium-technology manufacturing and labour-intensive service industries, particularly food and beverage, hotels and restaurants, transport and other tourism-related industries. 

“A large share of low-technology industries, dependence on unskilled foreign workers especially in the farming, construction, and labour-intensive manufacturing and service industries, and slow pace of industrial upgrading and automation technologies are some of the structural issues (that have led to the lack of skilled jobs),” he said.

The dominance of semi-skilled jobs, Prof Yeah said, would result in the country taking a longer period to transition to a high-income and developed economy.

“Wages and income will likely see slower growth and the economy will not be as dynamic as compared with regional peers that are experiencing more robust economic expansion,” he told StarPlus.

Brain drain 

 

Besides the slow income and economic growth, Prof Yeah said continued underemployment will compound the country's perennial brain drain problem.

The government, he said, can reverse the brain drain by ensuring the availability of skilled and well-paying jobs, favourable career advancement opportunities and prospects, and a politically stable and
socially conducive living environment.

All is not lost. Malaysia can still achieve its developed nation target, but catching up with other high-income countries will be much harder without a larger talent pool to drive investment, entrepreneurship and innovation, he said.

“To escape the inter-linked middle income trap and brain drain, the current efforts to strengthen governance, reduce corruption and enhance administrative efficiency must be stepped up,” added Prof Yeah.


Bring in investors

To  increase the number of high-skilled jobs, Malaysia Employers Federation (MEF) president Datuk Dr Syed Hussain Syed Husman called on the government to focus on attracting high-technology industries to the country.
 

These companies, he added, will create the high-skilled jobs we currently lack.
 

"It would be difficult for Malaysian companies to create such jobs as the majority of them are small and medium enterprises (SMEs).
 

“We need the government to offer good incentives to attract foreign, high-tech companies here.
 

"But we must also realise that if such companies are based here, we must be able to meet their manpower needs.
 

"While many of our job seekers are degree holders, the skills required by these high-tech industries can only be gained on the job,” he said.
 

Prof Yeah said Malaysia produces  a quarter of a million diploma and degree graduates yearly, so the supply of skilled labour is not an issue.
 

“There is, however, a need to enhance the quality and relevance of our talents to meet existing and new industry needs,” he said, adding that the share of the labour force with advanced education in Malaysia was 77.9% in 2022, which is more than the high-income nation average of 75.3%.
 

“The current drive to accelerate investments, industrial upgrading and economic transformation towards higher value, innovation-driven activities must be intensified to create a snowballing effect on the generation of high-value and skills-intensive jobs,” he suggested.


* Not her real name