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Is Youth Socioeconomic Mobility Further Away Than Ever?

And What’s To Be Done?

Concern over graduates’ prospects today is understandable. But over 70% of youth do not have diplomas or degrees. We ask whether non-degree holders face an even worse outlook.

By Edwin Goh & Nelleita Omar26 June 2020

Baca Versi BM

The long-standing notion that a diploma or degree will virtually deliver upward socioeconomic mobility has been increasingly eroding with the rise of digitalisation and job automation. For non-degree holders, the probability of climbing up the socioeconomic ladder is likely to be worse.

According to the 2019 Labour Force Survey Report, 86% of the Malaysian labour force comprise non-graduates. From the 2018 Graduate Statistics Report and the 2018 Statistics Yearbook, we estimate that around 77% of those aged 20 to 34 do not have a diploma or degree. We can safely infer therefore that the majority of new entrants to the labour market will not have tertiary qualifications.

Non-graduates typically take up semi- and low-skilled occupations, and are at the highest risk of being displaced by the forces of digitalisation and automation. These forces are expected to accelerate in a Covid-19 world. It is more urgent than ever to support young workers with few qualifications to upgrade their occupational skills. However, it is easier said than done.

The government has long pushed upskilling and retraining to be the solution for the socioeconomic mobility problem of non-graduate workers (and increasingly of degree holders as well). Just this year alone, the Federal government had allocated more than RM14 billion on various skills development programmes – over RM12 billion* under Belanjawan 2020 and an additional RM2 billion through the recently announced Covid-19 economic recovery plan PENJANA.

*This figure excludes allocations to the myriad entrepreneurship development programmes and skilling initiatives under agencies such as Cradle Fund, Malaysian Global Innovation & Creativity Centre (MaGIC), Perbadanan Usahawan Nasional Berhad (PUNB), TEKUN, MARA, Yayasan Peneraju Pendidikan Bumiputera and the Malaysian Indian Transformation Unit (MITRA). 

Allocations for programs are of course necessary, but are they enough to ensure that young people, of different backgrounds and abilities, get appropriately ‘upskilled’ and on to better incomes? Through some exploratory interviews, we asked whether young non-graduates were accessing the upskilling opportunities that are reportedly available and if not, why not.

Based on these conversations, we at The Centre found a rich diversity of youths with varying socioeconomic mobility potential. We saw that some non-degree holders are better positioned than others due to various factors. Understanding these factors is key towards ensuring that the billions allocated in training programs benefit the most problematic segments and deliver the promise of better incomes.

The job loss pandemic

But first, let’s consider the macro picture. On the surface, Malaysia is middle of the pack in socioeconomic mobility, ranked 43rd out of 82 on the World Economic Forum (WEF)’s Global Social Mobility Index 2020. According to the Index we are ahead of regional peers Vietnam (50th), Thailand (55th), and Indonesia (67th), though behind Singapore (20th).

Can we keep this up or even improve with the impact of Covid-19 on the economy? Doubtless, no countries are spared from the grim effects of the virus but it looks very negative for Malaysia so far: 168,300 people were officially jobless in April 2020, a 28% increase from the previous month. DOSM forecasts Malaysia’s unemployment rate to rise to 5.5% this year. More ominous still, the Malaysia Employers Federation (MEF) believes a great retrenchment is on the horizon.

According to the International Labour Organisation (ILO), accommodation and food services, manufacturing, retail and administrative activities will be the four hardest-hit sectors worldwide in this pandemic, with young workers being the most vulnerable to layoffs.

Some jobs will eventually come back like flight attendants and hotel workers. But some semi- or low-skilled jobs will likely face severe and permanent shrinkage in demand such as retail staff and clerical support workers, due to changing consumer preferences or greater technological adoption or both.

In the meantime, gig work has become a prevalent fallback to make ends meet due to the sustained demand for some gig services like food delivery. Nevertheless, these types of gig work are neither sustainable as long-term occupations, nor upwardly mobile. There is no escaping it: skills need to be upgraded for higher-value jobs that will continue to be in demand.

Understanding ground-level factors to inform top-down programming

The billions in training allocations fund a myriad of occupational training and upskilling opportunities but there has yet to be a comprehensive longitudinal study of its impact on participants’ socioeconomic mobility. This could be due to the sheer magnitude of the challenge – on TVET alone, the 2018 Report on Technical and Vocational Education & Training (TVET) outlined massive governance challenges such as fragmentation and duplication across ministries and agencies, a lack of a standard evaluation system, and many others.

There have been notable developments such as the setting up of industry-led bodies to co-develop training curriculums. While work on the supply side of training and upskilling continues, we note however that there is limited research on the demand side of the equation. Are current retraining and upskilling opportunities benefiting groups who need it the most, particularly youth with no tertiary qualifications? And if not, why not?

In preparation for a more in-depth study on this topic, we carried out exploratory interviews with several non-graduates in their 20s and early 30s from a variety of backgrounds. A few key points emerged giving us some insight into the ground-level challenges of raising the socioeconomic mobility of this demographic.

Firstly, young non-graduates’ earning potential appeared to be very much driven by parents’ educational and income background, the richness and helpfulness of social networks and their English proficiency. For some, the presence of all three factors gave them the confidence to forgo a degree altogether, trusting in their ability to self-direct their learning with online courses (mostly in English), tap their networks for jobs or apprenticeships or guidance, while at the same time being supported by a somewhat stable home environment. Having even one out of three still helped prospects greatly, particularly useful social networks or having sufficient English proficiency to read or view online learning materials.

Secondly, while almost everyone would agree that upskilling is important or necessary, having real motivation to achieve better socioeconomic status or skill mastery is a key driver in committing to training programs. And often, it is those who can envision a clear job or business opportunity that would be the most motivated and would act upon it.

Rethinking our training and upskilling approach

These are still initial themes which we hope to confirm and develop with further study and an expanded sample. Nevertheless, they do point to some ways in which to rethink our approach to training and upskilling young non-graduates.

Segmenting young workers by their potential for socioeconomic mobility and their learning styles is crucial towards understanding which programs could work for different segments. To put this into perspective, take the Global Online Workforce (GLOW) program, a partnership with the online learning platform Coursera. Young non-graduates with good English proficiency, stable internet access, independent learning styles and useful social networks would benefit the most from this great program. Those who aren’t as fortunate will need more comprehensive interventions, from career guidance to training to job placement.

Gig platforms have seen a surge in applicants over the last 3 months, indicating the economic and jobs fallout from the pandemic. But as one of our interviewees said, "no one wants to do these jobs forever". To move young workers into higher-earning occupations, we need to ensure that supply-side improvements of training and upskilling programs are matched by an understanding of the practical problems faced by different target groups. Otherwise, more fiscal allocations for upskilling and retraining programmes will be a waste of good intentions and scarce resources.

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The Centre is a centrist think tank driven by research and advocacy of progressive and pragmatic policy ideas. We are a not-for-profit and a mostly remote working organisation.