AS the global economy continues to recover, labour force is improving, albeit at a slower pace.
Global unemployment in 2018 is projected around 5.5%, slightly better than 2017’s reading of 5.6% on the back of a better global GDP outlook, with an expected growth of around 3.6% in 2018 from 3.3% in 2017.
Youth unemployment, which includes unemployed individuals aged 15 to 24, a typical age range that covers those who have just finished high school or graduated from colleges and looking for jobs, remains stubbornly high. In fact, global youth unemployment is higher than global unemployment. It is around 13.2% in 2017 and is estimated to stay around the same level in 2018.
Looking at Malaysia, although headline unemployment is around 3.4% in 2017, the youth unemployment rate is over three times higher at around 10.8% in 2017. Among Asean countries, the youth unemployment rate is lowest in Singapore at 4.6%, followed by Thailand (5.9%), Vietnam (7%), Philippines (7.9%) and Indonesia (15.6%). In China, it is at 10.8% while India’s youth unemployment is at 10.5%.
Is it a new problem?
High youth unemployment is not new. A key reason is the slower hiring compared to the number of job seekers. The slower pace of hiring is due to cautious business sentiments and a moderate economic performance that restrains businesses from expanding their workforce.
Unemployment among young people is one of the contentious political issues as well as a burden for people living through it. If left unchecked, it will result in serious long-term negative effects.
The country will have a generation of economically marginalised youth and this can lead to negative and far-reaching consequences on the economy and social landscape. They will be forced to contend with more self-reliant economic arrangements and even more job displacements, more so with the advent of the wider interconnectedness, alongside rapid technological advancement and the employment of foreign workers. There is a strong risk of brain drain.
The alarming rise in youth unemployment and the equally disturbing high number of young people who still live in poverty despite having a job shows how difficult it is to reduce unemployment, unless strong efforts are being made to achieve sustainable economic growth.