KUALA LUMPUR: The skills-related underemployment issue which is becoming more pronounced, could be due a mismatch between industry needs and available talent pool and non-marketable graduates.
It could also be due to a preference among the younger workforce for more flexible hours for work.
Underemployment refers to working individuals with tertiary education working in semi-skilled or low-skilled job.
The Department of Statistics Malaysia's (DoSM) data shows that skills-related underemployment for those aged between 25 and 34 stood at 41.6 per cent as at July 2023.
Underemployement for those aged between 15 and 24 was at 77.2 per cent
Bank Muamalat Malaysia Bhd chief economist Dr Mohd Afzanizam Abdul Rashid said the rate of skill-related underemployment among graduates swelled to 34.4 per cent in 2022 from 22.9 per cent in 2016.
"This suggests a mismatch in the labour market in terms of what the industry wants and what is available in the talent pool."There are also efforts to control overhead costs, especially on new recruitment whereby employers are not on a hiring spree. There is also a high dependence on low-skilled foreign workers," said Afzanizam.
However, he said this dependence on foreign workers might also reflect the nature of the work."For example, palm oil plantations will normally employ foreign workers to harvest the fresh fruit bunches (FFB). This is because the technology to harvest the FFB that requires highly skilled workers is not in sight. In a nutshell, it's not really a straightforward issue," he said.
To tackle the problem, he said companies should upgrade the way they operate to open up opportunities for graduates. Afzanizam said to facilitate the shift, the government could incentivise private firms via taxes, grants and subsidies.
"The government also needs to monitor the availability or lack of talent in key industries. "There was a proposal to employ new foreign graduates in the electrical and electronics sector as the country could only produce 5,000 graduates in this field, as opposed to the market demand for 50,000 engineers," he said.
Malaysian Institute of Economic Research economist Dr Shankaran Nambiar said the rise in underemployment was mainly due to "non-marketable" graduates.
"It could also be that they have no interest in holding regular jobs or prefer jobs that offer flexibility. Some graduates are doing jobs that can be done by those with lower qualifications, such as becoming an e-hailing driver.
"Young people are getting employed but there is a large group who are 'underemployed' in the sense that their time is not properly utilised.
"There is either a lack of demand for the time the youths are willing to supply or they are not interested in supplying more than a certain amount of time," he added.