Report blames lack of skilled jobs for slow economy, stunted wage growth

A report says Malaysia’s youths face unique challenges when looking for employment. (Bernama pic)

PETALING JAYA: A report on youth employment in Malaysia claims that employers’ reluctance to develop skilled jobs is one of the reasons economic development has slowed and wage growth has been stunted.

The report, authored by Lee Hwok Aun of the Singapore-based ISEAS-Yusof Ishak Institute, acknowledges that young workers and job seekers are having difficulties everywhere but says Malaysia’s youths face unique challenges.

Lee says Malaysians with tertiary qualifications are too frequently employed in semi-skilled or low-skilled jobs they were overqualified for and that the proportion of young people in professional or technical jobs has remained stagnant over the last decade.

Speaking to FMT, he said this mismatch was hurting young workers.

Lee Hwok Aun

“Working in jobs beneath one’s qualification may have a negative effect on salary, perhaps because the worker is not able to exercise the skills associated with the diploma or degree,” he said.

His report shows individuals with tertiary education in high-skill industries record higher average wage growth than those in semi-skilled jobs, highlighting the role industry plays in salary progression.

It also shows general wage growth and overall pay level have remained low among young people, which he attributes to a “scarcity of skilled jobs converging with a surplus of skilled candidates”, allowing employers to bid down wages.

“Employers keep paying low wages and resist raising entry-level pay simply because they can,” Lee said.

“The prevailing mentality is one that regards workers as a cost rather than a resource, that seeks to pay minimally rather than adopt a model of paying higher to attract and develop talent.”

The 11th Malaysia Plan (2016-20) aimed to ensure that 35% of employees were in skilled jobs by 2020, a target that has shown to be beyond reach. In 2019, only 11.3% of the workforce were employed in skilled occupations.

Lee found that one of the reasons for this disparity is that there are more tertiary graduates than vacant skilled roles, which suggests that companies and the government need to do more to promote high-skill jobs that suit the ability of the young workforce.

“Systemic change is needed to induce or propel employers to adopt a different strategy for raising productivity and paying higher wages,” he said, noting that SME loans and support for local contractors and vendors could drive upskilling and skilled employment.

In addition, he believes that amending the national definition of “full-time work” from 48 hours a week to 40 could “make companies rethink how they operate, and hopefully generate conditions that are more aligned with national aspirations for quality jobs and work-life balance”. - FMT