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This article first appeared in Forum, The Edge Malaysia Weekly on April 24, 2017 - April 30, 2017

The gnawing problem of youth unemployment, which was highlighted by the Malaysian Institute of Economic Research in its latest economic briefing last week, craves for solutions that can inspire a new breed of people to create value for tomorrow’s world today.

It is clear that the issue is rather serious, as the institute’s executive director Emeritus Prof Dr Zakariah Abdul Rashid stated, citing government data that about two-fifths or 200,000 of some half a million unemployed persons were youths.

The scale of the problem was dire enough to warrant a special eight-page section in Bank Negara Malaysia’s 2016 annual report, which noted the global nature of the phenomenon.

Worldwide, the youth unemployment rate is about three times the jobless rate of adults, it said. A similar ratio applies in Malaysia, where unemployed youths were estimated to make up 10.7% of the youth labour force in 2015, more than thrice the national unemployment rate of 3.1%.

In the aftermath of the global financial crisis, youth unemployment rose from a pre-crisis rate of 11.7% in 2007 to 13.1% in 2009, reaching a historic peak of 13.2% in 2013.

For 2017, the International Labour Organization sees youth unemployment on the rise again, particularly in emerging market economies, after improving slightly between 2012 and 2015.

The ILO states that early youth unemployment has serious long-term negative effects on future incomes and future risk of unemployment, particularly for youths who are immediately unemployed upon graduation, the central bank’s report said.

Worse, youths with tertiary education have a higher rate of unemployment at 15.3% compared to youths without tertiary education, at 9.8%. Interestingly, the report notes, this trend is seen elsewhere in Southeast Asia but not in the advanced economies.

Unsurprisingly, the usual suspects show up in the bank’s list of prescriptions.

“These developments in graduate unemployment raise several key policy questions for emerging economies, regarding enhancing the quality and relevance of education systems to prepare for rapidly evolving industries, the types of jobs being created and the readiness of the human capital base, and measures to enhance matching in the labour market and alleviate information asymmetry on industry skill needs,” the Bank Negara report states.

The systemic and structural issues that these solutions refer to are so pervasive that they have given rise to a vocabulary of youth unemployment. The Organisation for Economic Co-operation and Development, an intergovernmental think tank, counts them as NEETS — not in employment, education or training. The Economist has the darkly lyrical label — Generation Jobless — to describe the stubborn conditions that keep almost 290 million or a quarter of the world’s 15 to 24-year-olds unemployed.

Not all is doom and gloom, however. These challenges have given birth to a broad array of innovative programmes to tackle youth unemployment.

Many responsible businesses are already stepping up to the plate to induct youths into a new vision of economic rejuvenation.

The World Economic Forum’s Disrupting Unemployment portal, for instance, showcases over 80 business-led solutions, often involving multi-stakeholder partnerships, to address skills gaps, foster entrepreneurship and facilitate talent.

The quest for solutions points to three areas of intervention:

• Developing employment skills,

• Fostering entrepreneurship, and

• Connecting talent to markets.

Policymakers are also planning for the human resources transformation that is becoming increasingly critical to face the challenges of the current economic landscape.

Yet, the emphasis on industry-led programmes in technical and vocational education and training, such as the provisions under the 11th Malaysia Plan, shows that even with a policy framework that is responsive to the evolving demand for high value human capital, much work remains to be done to address the mismatch between the demand for skilled workers and the market-readiness of job seekers.

A key role in bridging that gap can be played by social enterprises, which have been described as businesses that are led by a mission, such as an economic, social, cultural or environmental cause, that has a public benefit.

Social entrepreneurship is what lies between government-led and business-led transformation, say authors Roger Martin and Sally Osberg in their 2015 study — “Getting Beyond Better: How Social Entrepreneurship Works” — on this phenomenon.

The case for social entrepreneurship is well argued in a 2015 report on creating jobs for youths, titled “Growing Employment Through Entrepreneurship”, by the Australian Clearinghouse for Youth Studies.

Although directed at an Australian audience, the presented research, which includes a substantial review of commercial and social enterprises and programmes in Australia and the UK that are enabling youths to integrate successfully into the economy, holds valuable lessons for Malaysia.

Among the 12 inspiring case studies presented are:

• The Youth Business International network, which involves members in over 30 countries who provide interest-free loans to start or grow a business, mentoring by an experienced business mentor during the challenging early stages of the start-up and technical training for every stage of the business development,

• Hub Australia, a co-working community offering spaces, ideas exchange and networking to entrepreneurs across Australia, and

• The Academy for Young Entrepreneurs, which teaches 10 to 12-year-old children how to take an idea they have conceived and turn it into a successful micro-business, with profits going to international development projects identified by the local programme delivery partners.

A 2010 study on the social enterprise sector in Australia, cited in the Growing Employment report, found that 49.1% of all social enterprises were established to benefit young people and 29.5% to help the unemployed, although these were not mutually exclusive.

A key recommendation of the report was to foster a sustainable national entrepreneurship ecosystem based on six elements: a national entrepreneurship strategy, optimised regulatory environment, active entrepreneurship education, technology exchange and innovation, access to finance and awareness-raising and networking.

A first step on that road would be to get young people to think “business” instead of “jobs” when they look to their future.


R B Bhattacharjee is associate editor at The Edge Malaysia

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