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Budget 2020: What's next for the youth?
Victoria Tay
Victoria is a 1st year LLB Law Student at the London School of Economics and Political Science. She is most passionate about issues pertaining to education and inequality in Malaysia and hopes to be a major player in drafting policies in future.
The initiative for the youth encapsulated in Budget 2020 is very much like the thought process leading to the commencement of a business, it requires hundreds of hours spent considering different aspects of management, market research, funding deliberations, and many more. This is all done with one aim in mind, that is to help reduce the increasingly prominent issue of youth unemployment in Malaysia.
In this article, we are going to focus on some of the current issues surrounding youth unemployment, namely subpar language skills, high salary expectations, and the unpolished skills of the graduates and see how the government’s proposed solutions aim to solve these problems.
Sources of Youth Unemployment
In a survey done in 2016 by the Malaysian Employers Federation (MEF), more than 90 percent of the respondents indicated that there is a need for graduates to increase their English proficiency to be more employable.
This shows that part of the reason why youths are underemployed is due to their subpar language skills which could be due to the lack of emphasis placed on English in schools. The shortfall in language proficiency could also be linked to the lack of cohesion in government educational policies whereby some schools teach science subjects in Malay instead of English. This becomes a problem later on in the workplace because more-established firms expect a certain degree of command in English.
Secondly, the MEF survey also shows that most graduates have high salary expectations, with Diploma holders expecting an average of RM2,070 per month, and degree holders expecting RM2,725 per month. In reality, however, the salary offered in 2016 is RM1,622 for Diploma holders and RM2,566 for degree holders. A JobStreet.com survey in 2015 also supports this notion by revealing that the top reason cited by employers for their low hiring rate is the unrealistic salary and benefit expectations of fresh graduates.
The difference between what is willing to be paid by employers and what is expected by graduates leads to low morale and lack of motivation to work. This leads to an increase in frictional unemployment whereby graduates move between one job offer to another in search of a better compensating alternative.
Thirdly, there is also structural mismatch of skills to job prospects. This is mostly because the education system in Malaysia focuses less on proactivity of students, owing to the passive nature in which classes are conducted. This means that graduates might not be trained in ways that would increase their commercial value later on in life. Since the salary of an employee is dependent on their marginal revenue product (MRP) to the company – the additional revenue that the employee is predicted to earn for the company – companies pay the graduates as they value them. Regrettably, this might be less than expected in some cases.
How Budget 2020 aims to reduce the severity of this problem
Under the Graduates@Work initiative, the government aims to promote the hiring of graduates who have been unemployed for 12 months or more. The graduates who are able to secure a job within the year will receive a wage incentive of RM500 per month, on top of their salaries, to encourage them to actively seek for jobs, hence reducing frictional unemployment. Employers, on the other hand, receive a hiring incentive of up to RM300 per month for each new hire, to compensate for the hiring of these underskilled graduates. This is predicted to increase the uptake of graduates who were initially unable to get jobs.
2. Apprentice@Work
As a keen stakeholder to nation building, the government is committed to further develop the youth’s technical and vocational skills through promoting TVET (Technical and Vocational Education and Training). This takes the form of learning and developing work related skills both in formal employment and self employment. TVET aims to improve the professionalism and accountability of the youth, especially in higher levels of qualifications. This would make graduates more geared towards the fields that they have chosen. The government plans to spend RM5.9 billion on TVET in 2020, an increase of RM 200 million from 2019.
This funding will also be used to strengthen public-private collaborations on TVET through state skills development centres (SSDCs). A grant fund of RM20 million to support customised TVET courses undertaken in collaboration with industries will also be allocated. This will expand pathways for TVET graduates to pursue further studies and hence, better secure jobs.
3. Promoting Upskilling in line with Industry 4.0
The Employees Provident Fund (EPF) will expand the scope of its education withdrawal for qualifications attained at certificate level, especially those accredited in line with Industry 4.0. The EPF is also looking to expand this withdrawal to include members’ spouses. This will not only promote adult learning, but also provide an avenue for our unemployed youth to further enhance their industry knowledge, prior to seeking for another job.
Evaluation of Government Initiatives
As seen in the image above, the government’s initiative is targeted to increase employment of public university graduates only by 0.5 percent to 54.00 percent in 2020. After so much effort is made in terms of monetary compensation and skill training, is the government aiming too low?
Furthermore, there is still no solution to the lack of English proficiency and professional skills in the youth due to the shortcomings of the education system. Tony Pua, during his sharing session in the London School of Economics has voiced out that it might take years to resolve the education system in order for it to match up to quality standards.
On another note, while we are optimistic that the aforementioned initiatives taken by the government will increase take-up of the underemployed youth, the current economic climate in Malaysia is still conservative and employers might not be willing to compromise the efficiency of the company for the relatively small amount of compensation given by the government.
In conclusion, the government is seen to be taking the right step towards tackling this issue that has been breathing down the nation’s neck for quite some time. I guess for now we can only wait and see what the future holds.