KUALA LUMPUR: Six higher education graduates competing for every high-skilled job.
This is among the findings of the World Bank, which highlighted the significant gap between the number of higher education graduates and the employment opportunities available in Malaysia that match their qualifications.
World Bank economist Alyssa Farha Jasmin said such development not only shows a lack of high-skilled job opportunities availabe in the country but also a mismatch between the skills of new graduates and the actual skills required by the job market.
She feared if this issue is not addressed, it could hinder the country's progress toward becoming a high-income nation in a sustainable manner.
According to the latest World Bank Malaysia Economic Monitor (MEM) report released last month, the rate of skills-related underemployment in the country rose to 37.3 percent in 2022, compared to 27.2 percent in 2010.
She added that a study by the Human Resources Development Corporation also showed that about 82 percent of employers reported that their current employees lacked sufficient skills or experience.
"A World Bank study in 2020 also reported that more than 40 percent of companies in the manufacturing and services sectors were struggling to find workers with leadership, communication, problem-solving, and general IT skills," she said.
She added that the issue of underemployment is also driven by many job seekers being attracted to flexible working hours, which leads them to pursue jobs in the gig economy.
This, she said, is one of the contributing factors steering job seekers away from high-skilled employment.
She explained that in the gig economy, workers can work anywhere and anytime they want, and some are even able to earn an income comparable to formal jobs.
She, however, said jobs in the gig economy usually require high physical effort and carry significant risks.
For example, in the event of a road accident, gig workers do not have access to social protection schemes and may be unable to work for an extended period, leading to unemployment.
"So, if this issue continues, Malaysia may face an increase in the outflow of skilled workers.
"This will reduce productivity and increase widespread underemployment, which will pose a barrier to Malaysia's progress towards a high-income economy," she said.
The findings by the World Bank also align with a recent study by the Khazanah Research Institute (KRI), which found that the reality of the job market for university graduates in Malaysia remains bleak, with starting salaries for new graduates almost unchanged over the past decade.
The KRI study showed that in 2021, 60 percent of new graduates received a salary of less than RM2,000 for their first job, compared to 61 percent in 2010.