The School-to-Work Transition of Young Malaysians Hisham Hamdan - - PowerPoint PPT Presentation

The School-to-Work Transition of Young Malaysians

Hisham Hamdan

Date: 12 December 2018 Venue: Mercu UEM, KL Sentral

Khazanah Research Institute

Background

+THE SCHOOL-TO-WORK TRANSITION OF YOUNG MALAYSIANS

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Background: From Inputs to Outcomes

Macro outcomes impact and are impacted by inputs from government policy. Similarly, Government policy both impacts and is impacted by Labour inputs (People).

• Quality of economic growth ultimately depends on quality of inputs.
• KRI’s mission is to undertake research on issues affecting the quality of life – and

therefore productivity – of people. The research seeks to influence policies with the

• bjective of achieving development outcomes beneficial to all Malaysians.

GDP

Macro Outcomes

Ringgit Unemployment Debt Inflation Rate Interest Rates Current Account Balance Fiscal deficit KLCI Index

Government Policy

Industrial Policy Technology Policy Labour Market Education Policy Energy Policy Bumiputera Policy Agriculture Policy Trade Policy Monetary Policy Housing Policy

People Inputs

Agri Smallholders Access to healthcare School- Work Transition Socio-economic mobility Decent Jobs Social Protection Affordable Housing Nutrition Care Work

+THE STATE OF HOUSEHOLDS 2018

• The economy combines labour and capital to produce output. In return, labour gets

wages and capital gets profits.

• Increasing wages requires increasing productivity. Increasing productivity requires

increasing labour quality. How do we improve the quality of labour?

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Background: The Economic Machine

The economic machine takes Capital and Labour as inputs to produce GDP; Labour Quality matters to increase Productivity & Wages

How the Economy Works

Capital Labour Profits Wages

GDP

Y = = AF(K,L) F(K,L)

Education Training Entrepreneurship

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Background: KRI’s 5 Focus Areas

Amidst the context of Demography, Science & Tech, and Politics & Geopolitics, KRI undertakes research in 5 areas impacting Growth, Equitability, and Societal Well-Being

• KRI investigates issues that impact Growth, Equitability, and Societal Well-Being within

the contexts of Demography, Science & Technology, and Politics & Geopolitics.

• Using the lenses of Shelter & Cities, Jobs & Skills, Food & Agriculture, International Trade

and Public Health, KRI forms policy insights relevant to Malaysia. Politics and geopolitics Demography Science and technology

Int’l trade Jobs and skills Shelter and cities Food and Agri. Public health

Growth Societal Well- Being Research Areas The Context in which We Operate Impact Areas Equitability

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Background: Our Journey So Far

KRI has published 10 Books, 9 Discussion Papers and various articles since its inception in 2014.

• KRI publishes books, discussion papers and articles, aimed at ultimately influencing

policy directions, while improving public awareness about crucial policy issues.

Books

Discussion Papers

Khazanah Research Institute

What inspired the SWTS?

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The State of Households II

SOH II provided a sharp focus on Malaysia’s demographic landscape – particularly gender and ageing

• SOH II highlighted several labour market issues, which touched on the difficulties for

Malaysian youth in finding decent work. The SWTS project was born out of this research from the SOH II.

2016

Households are better off But households becoming increasingly indebted More women have entered workforce Food prices rising faster than overall inflation

0% 20% 40% 60% 80% 100%

1995 2004 2014

Women’s labour force participation rate by age 1995, 2004, and 2014

Low wages and youth unemployment We are becoming an ageing population FOCUS OF SWTS

+THE SCHOOL-TO-WORK TRANSITION OF YOUNG MALAYSIANS

29% 30% 31% 32% 33% 34% 65% 66% 67% 68% 69% 70% 2010 2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 Working Age (LHS) Dependent Population (RHS)

Youth Indonesia 15.4% 2 4 6 8 10 12 14

Why does School-to-Work Transition matter?

Malaysia will have an aging population post 2020; if the youths of the present cannot get good jobs, how will they generate the GDP required to support our aging society?

Malaysia 15-24 World 15-24 Youth Unemployment (15-24 yrs)

Source: DOSM, ILO (2018)

%

Education ≠ Jobs

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Youth today best educated generation, but face challenges in finding jobs Working Age Population

Aging Malaysia

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Source: DOSM (2018)

2018-20 Peak 69.4% Working age population (15-64 yrs) will peak by 2020, and the dependent population (0-14, 65+) will increase

• thereafter. Without good jobs, how will

youths of today support our aging society?

• Youth today are more educated than ever, but still face increasing unemployment.
• An aging Malaysia means that it is crucial to equip youth with skills for future growth &
• productivity. Lower labour quality today means lower output tomorrow, making it

difficult to support an aging society. Lower Output

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Malaysia Total Wages

Profit GDP Capital Labour Lower Labour Input Lower Output

Youth Thailand 3.8% Youth Singapore 5.3%

Malaysia Tertiary Enrollment

6% 8% 10% 13% 17% 20% 24% 28% 1982 1987 1992 1997 2002 2007 2012 2017

% of Malaysia’s Labour Force with Tertiary Education

Source: DOSM

Less Support for Aging Population

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Youth World 12.6% Youth Malaysia 10.8%

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Common Perceptions among Employers

How true are these Perceptions?

• Unemployed youth in Malaysia are typically perceived as ‘too choosy’, have unrealistic

expectations or do not have the skills desired by employers.

• But how much of these common notions are grounded in reality?

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Number of Participants

Why the SWTS methodology?

This SWTS is the first ever in Malaysia, and has been adapted to the Malaysian context, providing direct input from youths who typically are not given a voice

• This report is the result of conducting the first ever SWTS in Malaysia.
• SWTS provides direct inputs from youths on youth profiles, transition experience &
• aspirations. SWTS also sheds light on skills mismatches & popular myths in the youth

labour market. Employer

The SWTS in Malaysia

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Direct Input from Youth & Employers

Upper Secondary 7,026 Young Job Seeker 5,696 Young Worker 5,871 TOTAL Youth 22,165 TOTAL Employers 1,620 Tertiary Education 3,572 SWTS was conducted from end of 2017 to start of 2018

Provide qualitative & quantitative analysis on…

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Survey developed by ILO

Tested in 34 low/middle-income countries

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Youth

Youths’ Aspirations & Behavioral Choices Quality of Transition Individual Profiles determine labour market outcomes Clarify misperceptions of youth labour demand

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Education Job-seekers Young workers

Chapter 2 In-School Youth Chapter 3 Youth in Tertiary Education Chapter 4 Young Job Seekers Chapter 5 Young Workers

Employers

Chapter 6 Employers

Youth Labour Landscape: What we cover

Transition from school-to-work is a critical juncture in the life of any young man/woman

• SWTS analyses the issues & provides policy recommendations for each stage of a

youth’s experience with transition from school to workforce.

• Each stage is equally crucial as it feeds into the next. The necessary support &

resources must be provided throughout the whole process to improve quality of transition.

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Thank You

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FOCUS OF SWTS

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Climbing the Ladder: Socio Economic Mobility in Malaysia

Malaysia is mobile ─ One’s starting point is not the most important factor for mobility

• KRI’s Socio Economic Mobility Study in 2015 provided a measure of how Malaysian

families have fared in the face of growth and structural transformation.

• Improvements in children education levels relative to parents form an important part of

the SWTS research – Why do better-educated children face poorer job prospects? Children better educated than parents 19% of children’s income is associated with parents’ income, lower than many developed nations Children better skilled than parents Gender & location key determinants for upward mobility ‘Middle class squeeze’

2016

Male children more likely to be upward mobile than female Children in urban more likely to be upward mobile than rural Children move down the income ladder and earn less than their parents

+THE SCHOOL-TO-WORK TRANSITION OF YOUNG MALAYSIANS

Part 1: State of Households

Households are stretched, particularly the low-income households. On the other hand, at the Macroeconomic level, Malaysia’s labour share of income is rising. Why is this?

Malaysia

Malaysian Labour income share goes against global trends…

Source: IMF (2017)

30% 35% 40% 45% 50% 0.30 0.35 0.40 0.45 0.50 Gini Coefficient (LHS) Adjusted Labour Income Share (RHS)

Source: DOSM (Various Years), KRI Calculations

…leading to a lower Gini

0% 20% 40% 60% 80% 100% % share of total employment

Agriculture (12%) Construction (9%) Mining (1%) Manufacturing (17%) Services (61%)

Malaysia transitioned towards Services…

Sources: KRI (2017) Employment by sector, 1960 – 2015

14 14 41 44 10 20 30 40 50 60 2005-2010 2011-2016

But what kind of Services?

Modern Private sector services, % of GDP

What does this mean?

Short term: Malaysia growth more inclusive as rewards to labour rise Long term: Growth less reliant on technology, reducing ability to harness innovation and drive productivity growth

• Malaysia has bucked global trends, with a large increase in labour income share from

1991-2014. This has helped to reduce inequality in Malaysia.

• However, this has come due to an economic structure that prioritises traditional

services rather than high-tech sectors. Continuing on this path threatens future growth.

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Industrialisation