Estimating Psychological Impact Of Unemployment Essay


Discuss about the Estimating Psychological Impact of Unemployment.



Malaysia is a prominent nation of South East Asia and is covering the parts of the Malay Peninsula and the island of Borneo. The nation is a well known tourist destination and is attracting thousands of tourists across the globe for its beautiful beaches. The nation is constituted with thirteen states and three federal territories.

With a 31.9 million [as per World Bank, 2016] population the country is the 44th most populous nation of the world and the population of the country is growing at a rate of 1.95% per anunm. The multi-ethnic and multi-cultural profile [Malay 50.1%, Chinese 22.6%, indigenous 11.8%, Indian 6.7%, other 0.7%, non-citizens 8.2%] of the country has a big impact over the political and economic conditions of the country(Jomo, K.S., 2016).

The current rate of unemployment in Malaysia is around 3.5% [July, 2017].The average rate of inflation of the country was around 2.09% in the year of 2016.According to the world bank the GDP per capita of the country was around 9,502.57 USD in 2016(Ismail, 2011).The study of the historical data reveals the fact that the GDP per capita of the country has registered a continuous growth from 1995 onwards [$4328].

In order to reduce the level of youth unemployment the government of Malaysia has taken the policy decisions to develop effective strategies in order to transform the national education system. The institutions of higher learning will be empowered with greater autonomy and accountability to produce technologically savvy well educated graduates who will be capable to handle the recent technology challenges and to add value to the technical manufacturing centre of the country.

The study of the historical data regarding the rate of unemployment reveals the fact that the average rate of unemployment for the country was around 3.28% for the period between 1998-2017.The country has seen an all time high rate of inflation of 4.50% in March, 1999.The current rate of unemployment of the country is around 3.5% and by 2020 it is expected that the rate of unemployment of the country will stay around 2.75%( Lucas and Verry, 2016).

Describes that 61% of the age group is concentrated within the age group of 15-24 years.20% of the unemployment is present in the age group of 25-29 years. Thus majority of the countries unemployed workforce are from the youth population.Thus the youth population is the most vulnerable group so far the problem of unemployment is concerned in Malaysia (Ibrahim and Mahyuddin, 2017).

The youth unemployment is the most striking problem of the nation. By the end of 2015 the rate of youth unemployment of the nation has reached to a rate of 10.7%.According to Bank Negara [Central Bank Of Malaysia] the youth unemployed population accounts for half of the total unemployed population of the country. Youth population are the section of the population that is most badly hit by the problem of unemployment. Because in an economy where is dearth of job the youth population is hired last and retrenched first due lack education or degrees of higher studies.

From the above figure it can be seen that the youths who are the diploma holders and who are in the monthly family income bracket of less than RM 1000 are facing maximum problem [As 42% of these people are unemployed]to get a job in Malaysia.

Youth unemployment is a huge problem for the country Malaysia. Within this age group of 15-24 years who are eligible to work only 16% are having the tertiary education and remaining 84% of this age group has received secondary education. And within the unemployed youth workforce 77% are having non tertiary education and 23% are having the tertiary education (, 2017. Thus it can be seen that youth with tertiary education are covering the greater portion of the unemployed youth when compared with that of the overall unemployed youth workforce. The tertiary youth unemployment rate of the country was around 15.3% and the non-tertiary youth unemployment rate of the country was around 9.8 %( Tang, 2009).

The figure-5 demonstrates that the GDP per capita of the country Malaysia has registered a continuous upward trend for the period of 1960-2016 with some occasional decline in the growth rate. However during the decades of 2006-2016 the economy has registered the maximum growth as the average growth rate for the period was around 53%.

The growth of the domestic demand (7.7% demand in the first quarter, 2017) of the nation has propelled the expenditure both in the public and private sector of the economy. As a result of which the private expenditure of the nation has grown at a rate of 6.6% and the public expenditure of the nation has grown at a rate of 7.5% during the first quarter of 2017(Zamberi , 2013).

The growth of private investment at a rate of 7.5% has also acted as a prominent growth driver with respect to the Malaysian economy(Woo,2009).

The inflow of foreign direct investment has also added to the growth of the economy and is identified as one of the major drivers of the economic growth of the country. In the year 2016 the country has realized a 40% growth with respect to the inflow of FDI with in the country and the volume of such FDI is around MYR 50 billion(Bekhet, and Mugableh, 2016).

Though unemployment has become a serious issue in the country but the country has managed to maintain good stability in the labour market. Though the rate of unemployment of the country is growing steadily from 2014, but still the country has managed to control the rate of unemployment in between 3.2% to 3.5%.During this period the nominal wage of the country has grown at stable rate of 4.5%.

But this is not the solution of the persistent problem of unemployment that is present in Malaysia. Because if the country fails to control the issue then the economy has to face the following long term impacts which in turn will affect the growth perspective of the economy(Karimi and Yusop, 2009).

The possible impact of presence of Unemployment in the economy will be as follows:

If the country fails to solve the problem of youth unemployment then there will be huge unrest among the society. Among the youth population the educated youths of the Malaysia are the worst affected section of the unemployed workforce and if they fails to get a job then the young population will lose their trust over the higher educational system of the country and eventually will leave the nation in search of better jobs(Kefela, 2010). Thus youth unemployment will lead to large scale brain drain in the country and the growth of the technical sectors, service sectors of the economy will lose the educated intelligent workforce when needed. Thus the issue of youth unemployment is badly hampering the development of the future workforce and long term growth perspective of the economy.

Due to the problem of unemployment the hiring process of the economy becomes slow which in turn leads to slow development of the effective workforce which intern will affect the overall demand and production of the economy(Lucas and Verry,2016).

Unemployment also affects the income of an individual. If an individual continues to earn lower income for a prolonged period then the individual will be forced his consumption demand which in turn will reduce the production of the economy. The reduction of demand, consumption and then production with reduce the overall expenditure of the economy. A low demand for production and consumption will reduce the overall output of the economy which in turn will bring retardation in the economic growth of the country ( Lim et al.,, 2008).

Besides unemployment has a very bad impact over the society. The eligible persons who are failing to get suitable jobs may become so much frustrated that they may give up searching for jobs permanently and will then become a part of long term unemployment of the country.

Besides presence of unemployment will also lead to underutilization of resources within the country as a result of which the country will never be able to produce the level of output that ensures long term growth sustainability(Singh, and Singh, 2008).

In Malaysia there is a great deal of frictional and cyclical unemployment among the young educated population of Malaysia. When the educated youths are trying to move from one job to another for improvement of their carer then they are facing a lot of difficulties which is badly harming their self confidence and moral. Again as the educated young are failing to get the standard of job they are looking for then they are becoming the victim of cyclical unemployment(Lim, 2017).

Thus in brief it can be said that though the growth of the Malaysian economy has not being much affected by the presence of unemployment as the growth of the economy has been shielded by the different growth drivers discussed above but in the long run if the issue of the unemployment persists then the economy will face a reduction in demand & production that will result in overall reduction of the economic output of the country. If some of the growth drivers of the country become weak in near future, then the economic growth rate of the country will be badly hampered by the presence of staggered unemployment in the economy. Therefore immediate measures are to be taken for controlling the issue of unemployment with ion the economy.

As per the education Blueprint (2015-2025) Malaysia in order to handle the problem of youth unemployment s meaningful strategies are to be developed for transforming the national education system so that they can produce well educated technical workforce.

Besides the scope and opportunities of the vocational trainings are to be enhanced for making the educated youth more eligible for the available job world of the country

Development of a comprehensive social security sector is essential in order to protect the unemployed workforce from frustration and loss of moral.

MARKET POLICIES (ALMP) which are specifically developed for helping the unemployed youth, as well as displaced workers in order to reduce the frictional unemployment which the works face while they are looking for a transition from one job to another. The two main objectives that are intended to be fulfilled by the ALMPs are long term increase employment opportunities, and creation of jobs that match to the expectation and educational level of a worker in Malaysia. Thus the ALMPs are expected to reduce the incidence of brain drain from the country (Furuoka, and Munir,2014).

. The government of Malaysia has also thinking of implementing Employment Insurance Scheme (EIS), which was announced in Budget 2015. The objective of introducing this holistic programme is to fulfil the same objectives of ALMP and additionally to deliver good career counselling services and training to the educated youths (eligible for jobs) for enhancing their opportunity to get a job.

Public Employment Services should be provided for assessing the personalised needs of the job seeking workforce. Under this service employment plans are to be build to guarantee placements to the youth workforce as per their matching requirements.

The process of job creation and matching of job is to be further facilitated by using the technology, as evidenced shows that popular Smartphone-based career applications portals and websites such as Switch, LinkedIn have become one of the primary options for the jobseekers to communicate with the employers regarding the skills and potential acquired by them. So measures are to be taken so that better application of technology can be made for finding the new talents in the job market of Malaysia.

The government of Malaysia is taking steps so that more and more companies develop vocational training programs in partnership with the universities and other higher educational institutes so that the youths can receive an industry focused education during their graduation.

The policy makers of the country are of opinion that in order to enhance the job opportunities for the workforce the indigenous companies have to reduce their dependencies over the foreign workers (Awad, and Youssof, 2016).

The government of Malaysia has taken the measure to develop new start-ups that can recruit the fresh graduates irrespective of their level of experience.

Thus from the above discussion it can be seen that Government of Malaysia has taken strong initiative to curb the problem of unemployment with in the country and majority of the initiatives have taken to solve the problem of youth educated unemployment as the educated youth constitutes 61% of the total unemployed workforce of the country.

Finally along with the measures of controlling the problem of unemployment, the government of Malaysia should carry on the policy of trade liberalization so that a variety of economic activities can be created which will lead to creation of more jobs. Moreover the government should always maintain a favourable environment for foreign direct Investment so that the country can shield the economic growth from the problems of unemployment.

The Malaysian economy is currently suffering from the issue of unemployment and the current rate of unemployment of the economy is 3.5%.The youth unemployment is the biggest issue or problem that is affecting the overall economic development of the nation. The youth unemployment is accounting 61% of the total unemployed workforce of the country( Lim, 2013).

The problem of youth unemployment is a burning issue to the Malaysian Economy as in near future the staggering unemployment will lead to reduction in income & expenditure. A decline in income and expenditure will lead to reduction of consumption demand and overall output and production of the country .Moreover the young unemployed who are the most vulnerable group to be affected by the presence of unemployment are losing their satisfaction and moral when they are failing to get a job in the job market which may lead to social unrest.

The government of Malaysia is taking several initiatives like introducing vocational training opportunities and industry focused graduate training programme so that more and more fresh graduates can be included in the job world. These initiatives are being taken for controlling the presence of frictional and cyclical unemployment within the economy.


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