Managing Youth Unemployment

Tackling youth unemployment must be made a permanent national agenda with the policies orientated towards equipping the country’s younger generation for an increasingly tough job market.

Bank Negara said socio-economic developments in the past few years have dramatically worsened the state of youth unemployment globally.

The twin developments of persistent high youth unemployment and rising income inequality, it said, could constrain social mobility, and lead to increasing dissatisfaction among the people.

“In Malaysia, this has already contributed, in part, to brain drain – the flight of high-skilled talent to advanced economies and neighbouring countries, in search of better jobs and pay.

“Left unattended, a generation of economically disenfranchised youth could have negative and far-reaching ramifications on the economic and social landscape,” the central bank said in its latest annual report.

In the near future, it said youths were faced with more self-reliant economic arrangements and further job displacements, in line with the advent of wider interconnectedness and rapid technological advancement.

“Thus, policy must be orientated towards preparing the younger generation to meet these challenges head on,” it said.

The central bank stressed that quality education, particularly an effective technical and vocational education and training (TVET) sector was important towards building the country’s human capital.

These goals, highlighted in the Malaysian Education Blueprint (2015-2025), outlines meaningful strategies to transform the national education system, empower institutions of higher learning with greater autonomy and accountability, develop technologically savvy, well-rounded graduates, and improve the quality of the national TVET sector.

Bank Negara noted that for youth in particular, research has shown that more access to effective vocational training was linked to lower rates of youth unemployment.

Secondly, it said, promoting industry collaboration in education and training was crucial for community-building and to nurture a vibrant workforce.

“A well-funded and effective platform is needed towards offering high-quality training and promoting workforce development.

“Such a platform would serve as an avenue in which the government, industry, and education and training sectors could consult and develop curriculum and training to fulfil industry skill needs, and actively support implementation and continuous enhancement efforts,” it added.

Youth unemployment in Malaysia has been on the rise recently as hiring growth declined since late 2014.

Cautious business sentiments and moderating economic performance have restrained businesses from expanding their workforce.

Youth unemployment rate was estimated to have reached 10.7% in 2015, more than three times higher than the national unemployment rate of 3.1%.

Malaysia is among regional economies with an incidence of youth unemployment in the double-digits, despite a low overall unemployment rate.