Unemployment in Malaysia Essay

Introduction

This essay intends to provide the idea of conducting the research. It starts with a background study that covers the unemployment issues in Malaysia and how the youth unemployment rate is affected. Moving on, the problem statement is discussed, which summarizes the industry issue, and providing research gaps that are found in the previous research articles reviewed. Research questions, followed by research objectives are subsequently stated in this essay. Next, theoretical significance and managerial significance are covered in the significance of the study.

Background of the Study

Over the past ten years, the unemployment rate in Malaysia has always been in a relatively low and stable percentage, of an average of 3.25 percent (Statista, 2018). Department of Statistics reported that in January 2018, the unemployment rate was recorded as 3.4 percent, which is 0.1 percent higher than the previous month. The number of unemployed citizens increased by 10,700 as compared to 505,800 number in the previous month although the labor force participation rate increased by 0.1 percent from 68.1 percent (RTT News, 2018). Unemployment is a phenomenon that occurs when a person is actively looking for employment but cannot get work, which is often measured by the unemployment rate – the number of unemployed people divided by the number of people in the labor force (Unemployment, 2019). Human Resource Minister Datuk Seri Richard Riot stated based on the benchmark from the Organization for Economic Cooperation and Development, any nation with an unemployment rate below 4 percent is perceived to have full employment (The Star Online, 2017 March 23).

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Plus, the unemployment rate in Malaysia is ranked 38th amongst 218 countries around the world, from the lowest to highest. This proves that Malaysia is still not in a critical situation with little or no problem in terms of employment of fellow citizens as compared to the last two ranking countries – Djibouti (40 percent) and Syria (50 percent) (Central Intelligence Agency, 2017). According to Trading Economics' global macro models and analysis expectations, the unemployment rate in Malaysia is expected to be 3.70 percent in the next twelve months and shows an increase to around 4.10 percent in 2020 (“Malaysia Unemployment Rate”, 2018). However, the youth unemployment rate is something that caught the attention of all.

Although Malaysia is in a non-critical state for the overall unemployment rate, many graduates or non-graduates are reportedly unemployed. On 25th March 2017, The Star Online reported that Malaysia, along with other countries, is encountering the problem of an increasing rate of unemployment youth. According to Bank Negara, the percentage of youth in the category of unemployed has exceeds half, even though youth only make up one-third of the labor force (Ibrahim & Mahyuddin, 2017). The unemployment rate for youth is surprisingly three times the average unemployment rate of Malaysia, being in double digits – 12.4 percent (Bernama, 2018). It is noted that this rate exceeds all other age groups’ rates in Malaysia (The Star Online, 2018). Over the past two decades, the Malaysian youth unemployment rate has increased by 5.4 percent, from 7.0 percent in 1997 (Unemployment, Youth Total, 2017). On a more shocking fact, the percentage of unemployment with tertiary education exceeds those without tertiary education. Of 405,000 Malaysian citizens categorized as youth with tertiary education, 15.3 percent of them are unemployed and this percentage is the highest among all the unemployed. In comparison, unemployment amongst total youth without tertiary education of 2,162,000 persons is only 9.8 percent. Observing the status of graduates in the first half-year time frame after graduating, only half of the total graduates in 2015 (53 percent) were employed while about a quarter of the graduates (24 percent) were still in the situation of unemployed (Ibrahim & Mahyuddin, 2017). Just like the news headline claimed, 200,000 graduates are currently unemployed (The Sun Daily, 2016).

Undeniably, measurable steps have been taken continuously about the employability of the youth and graduates. Skim Latihan 1 Malaysia, Technical and Vocational Education Training Malaysia, and some other programs had been organized by the government, as mentioned by Socio-Economic Research Centre Sdn Bhd ED Lee Heng Guie on 21st November 2017 (Aisyah, 2017). Furthermore, Malaysian Institute of Economic Research (MIER) board of trustee member Tan Sri Dr Anuwar Ali opposed the idea of extending employees’ working age to 60 in trying to boost the percentage of the younger workforce in the industry (The Sun Daily, 2017). The government, too, gives incentives to companies that employ Malaysian citizens while taxing them heavily if foreigners are employed for the position in the hope of reducing foreign workers that are deemed to have taken the job opportunities of their fellow graduates (The Star Online, 2017 March 25). All in all, everyone is doing their part in addressing the unemployment rate among youth and graduates. Job vacancies are reported increasing year by year, but the unemployment issues among youth remains unsolved (Free Malaysia Today, 2018). This indicates that factors other than lack of job opportunities are influencing the phenomenon.

Mismatch of graduates from tertiary institutions (supply) and potential employees that employers seek (demand) is one of the unemployment issues that has always been unsolved in Malaysia (Ramakrishnan & Mohd Yasin, 2011). It is not that employers are being demanded to find the right candidates but because most of the graduates are not qualified for the job they seek. Jobstreet Malaysia Company’s 2017 survey revealed that the top five causes of graduates' unemployment rates are unrealistic salary or benefits expectations; demands on the job or company entered; poor character, attitude, or personality; poor English language literacy; and poor overall communication skills – from the most voted to the least (Balakrishnan, 2017). There are a lot of unemployment issues surrounding the youth and graduates. By youth, it means citizens between the ages of fifteen to twenty-four years old. They can never stand out among the crowds anymore while holding a certificate from tertiary education institutions attended because it has become a common step for the youth nowadays to pursue their education to that extent. They must develop other ‘value-added’ experiences, skills, and qualities (Beaumont et al., 2016). Furthermore, according to the university-industry forum held at UiTM Shah Alam, employers are more likely to look for graduates who are ready for employment (New Straits Times, 2017). Just how employable are they is something that should be focused on. And so, questions arise. What is Malaysian youth's perspective on getting a chance for employment? What do they think can aid their employability possibilities? Are there any alignments between what the society said and what the Malaysian youth thinks?

With these questions in mind, this study intends to focus on a more specific group of youth – bachelor-degree University students in Malaysia on their self-perceived employability to see if they understand the current unemployment issue that makes them more employable.

Problem Statement

Unemployment issue in Malaysia is not a big issue that concerns the public. It has always been in a relatively low and stable percentage, with an average of 3.25 percent in the past decade and it is predicted to remain below 4.0 percent for the upcoming year (“Malaysia Unemployment Rate”, 2018; Statista, 2018). However, the youth unemployment rate has reached two digits (12.4 percent) despite the low overall unemployment rate of the country in recent years (Bernama, 2018). This rate has exceeded all rates of other age groups in Malaysia (The Star Online, 2018). What’s more, the percentage of unemployment among graduates from tertiary institutions outpaces the others without tertiary education. Observing the status of graduates in the first half-year time frame after graduating, only half of the total graduates in 2015 (53 percent) were employed while about a quarter of the graduates (24 percent) were still in the situation of unemployed (Ibrahim & Mahyuddin, 2017). Even though the number of jobs available in the industry has risen over the years, the youth unemployment rate continues to worry the country (Free Malaysia Today, 2018). A lot of possible reasons have been raised regarding the relatively high youth unemployment rate but fewer concerns have been given on youth and graduates' thoughts in Malaysia. Their own perceived employability is not being emphasized but mostly, studies look from the employer's perspectives, for instance, Hanapi and Nordin (2014), and Singh and Singh (2008) that used working adults as respondents in viewing employability. Thus, there is a gap to investigate from a student perspective – their opinion about their employability. Exploring Malaysian youth’s viewpoint on how to be employed is an important note to society.

Many researchers focused on the factors that are related to Internship Experience (Ishengoma & Vaaland, 2016; Qenani et al., 2014; Tymon, 2013; Wharton and Horrocks, 2015), Teaching Method (Hanapi and Nordin, 2014; Hernandez-Lopez et al., 2016; Tymon, 2013; Wharton and Horrocks, 2015), and communication skills (including English Language Proficiency) (Hanapi & Nordin, 2014; Marzuki et al., 2013; Moslehifar & Ibrahim, 2012; Tymon, 2013; Wharton and Horrocks. 2015). However, only one previous research (Rothwell et al., 2008) explored on University Commitment factor in determining students’ self-perceived employability. Besides, previous research carried out in Malaysia only discussed English Language Proficiency (Hanapi & Nordin, 2014; Marzuki et al., 2013; Moslehifar & Ibrahim, 2012), Teaching Methods, and Quality of Education (Hanapi and Nordin, 2014), but not University Commitment nor Extracurricular Activity or Internship Experience.

Hence, this study closes the gap in literature by including four more factors namely University Commitment, Internship Experience, Teaching Method, and English Language Proficiency in an attempt to understand factors influencing bachelor-degree students’ view on employability. Six independent variables will be tested instead of just a few variables to provide a more thorough idea. Plus, most independent variables listed are yet to be discovered in the Malaysian context. It is noted that not all findings for the journal reviewed are taken into consideration because some variables are hard to measure and unrelated to Malaysia. This study will focus mainly on the factors mentioned towards Malaysian university bachelor-degree students in solving the current shortcomings of literature on the factors listed in the context of Malaysia. The research will try to cover the viewpoint of university students from most faculties to discover any similarities in their answers.

Research Questions

General Research Question:

What are the factors influencing self-perceived employability?

Specific Research Questions:

• Is academic performance a factor influencing self-perceived employability?
• Is the extracurricular activity a factor influencing self-perceived employability?
• Is university commitment a factor influencing self-perceived employability?
• Is internship experience a factor influencing self-perceived employability?
• Is teaching method a factor influencing self-perceived employability?
• Is English language proficiency a factor influencing self-perceived employability?

Research Objectives

General Research Objective:

To determine the public university bachelor-degree students’ self-perceived employability

Specific Research Objectives:

• To investigate the relationship between academic performance and self-perceived employability
• To study the relationship between extracurricular activity and self-perceived employability
• To evaluate the relationship between university commitment and self-perceived employability
• To identify the relationship between internship experience and self-perceived employability
• To discover the relationship between teaching method and self-perceived employability
• To observe the relationship between English language proficiency and self-perceived employability

Significance of the Study

Theoretical Significance

To prevent the increment in the percentage of youth and graduates unemployment rate, research on self-perceived employability should be discussed. This study extends the work of Pinto and Ramalheira (2017) that focused on the view of Portuguese working adults on Academic Performance and Extracurricular Activity only in determining perceived employability. The extension of variables include University Commitment (Rothwell et al., 2008), Internship Experience (Ishengoma & Vaaland, 2016), Teaching Method (Hernandez-Lopez et al., 2016), and English Language Proficiency (Marzuki et al., 2013) in the context of a developing country such as Malaysia to examine bachelor-degree students’ self-perceived employability, instead of working adults.

In addition, four theories have been introduced into this study, namely human capital theory, credentialing theory, social identity theory, and diving board theory. This study provides evidence for the applicability of these theories in the Malaysian context. Human capital theory emphasizes on the importance of education which could lead to the efficiency of workers (Olaniyan & Okemakinde, 2008). Credentialing theory emphasizes that graduates need to add value to their credentials other than educational credentials to differentiate them from other graduates (Collins, 2002; Tomlinson, 2008). Social identity theory is about how an individual define their own identities based on their social groups (Tajfel & Turner, 1979). Diving board theory explains that increase in self-confidence from work experience can improve employability (Beaumont et al., 2016).

Managerial Significance

This research study will benefit universities, students, and the Ministry of Higher Education from different directions.

Firstly, this study is important to the university. The findings will help the university identify factors that improve employability and plan strategies accordingly. Undeniably, as a student, I found it rather disappointing with some lecturers today who barely make any commitment towards improving students’ knowledge. Apart from disliking the course taken, students learned nothing useful that can be applied to their future employment. Therefore, if the teaching method is found significant, the university should check on the quality of lectures from time to time to ensure knowledge useful and consistent with the job market is covered. Besides, the university will also note the benefits of the university's commitment to improving students’ self-perceived employability. Measurable steps, hence, should be taken to improve the university’s brand name.

The findings will also help students understand ways to improve their employability chances. For all independent variables that are found significant, students should take note and try their best to strive in those variables during their academic degree to enhance their employability. Instead of focusing on studying alone, students will know what other factors that can improve their chances of getting employment, and thus, actively participate in those activities.

Finally, the findings will help the Ministry of Higher Education design a program that could help increase the employability of graduates. For instance, if internship experience is found significant, all courses and universities in Malaysia should embed the opportunity for internship for every bachelor-degree student. Instead of putting it as a course that students can choose to register for or vice versa, the internship program should be put as compulsory for every student. This allows them to explore the world of job market so that they are more prepared when they are graduates.

Operational Definition of Concepts

• Several keywords will be touched on and covered throughout this research. Hence, definitions are provided in this subtopic to reduce uncertainties of the terms. Table 1.1 categorized the keywords and their definitions.
• Self-perceived employability - Self-perceived employability is the “perceived ability to attain sustainable employment appropriate to one’s qualification level” (Rothwell et al., 2008).
• Academic performance - Academic performance is how university students perceive the results and grades obtained and their satisfaction with the results and grades (Dacre et al., 2014; Rothwell et al., 2008).
• Extracurricular activity - Extracurricular activity is activities and events that students engage in, which are not parts of their formal degree classification such as hobbies, social groups, sporting, cultural or religious activities, and voluntary or paid work (Thompson et al., 2013).
• University commitment - University commitment is the reflection of employability (a psycho-social construct) to the lived experiences of university students (Fugate et al., 2004). This was based on the measure of organizational commitment identified by Mowday, Steers, and Porter (1979).
• Internship experience - Internship experience is the opportunity given for students to understand working conditions and to develop relationships with hospitality workers and supervisors (Marinakou & Giousmpasoglou, 2013).
• Teaching method - The teaching method is the ability to present knowledge and skills learned, create opportunities for students to practice skills and participate actively in the learning process, and provide feedback (Salas & Cannon-Bowers, 2001).
• English language proficiency - English language proficiency is the ability to communicate effectively in different social and professional contexts with English since English is the second language in Malaysia (Moslehifar & Ibrahim, 2012).

To add a brief conclusion unemployment issue among youth should be emphasized and look for solutions immediately. Many solutions have been carried out by society but what have the youth done is something we should look into. If the youth do not realize the impact of the rate towards their future, no solutions will bring an immediate effect. As youth is a wide category of age, from fifteen to twenty-four, this research will focus on the perspective of university undergraduate students currently in their bachelor-degree programs. Interestingly, graduates from tertiary institutions faced a higher unemployment rate as compared to others without tertiary education. What are the reasons that make up the high percentage that caught the attention of public? What are their perceived factors that can add points towards their employability?