Malaysia faces a complex employment challenge known as the "skills-to-job paradox," identified by Human Resources Minister Steven Sim. This paradox highlights the misalignment between the skills of graduates and the specific demands of various industries. Despite producing a significant number of graduates annually, Malaysia struggles with high underemployment rates due to this mismatch. The issue is not a scarcity of qualified graduates but rather a disconnect between academic training and industry needs. In response, the Malaysian government is taking steps to address these discrepancies through initiatives such as expanding TVET (technical and vocational education and training) programs.
The skills-to-job paradox is a critical issue in Malaysia's labor market. Each year, the country produces about 100,000 TVET graduates, yet a high underemployment rate of over 36% persists. Many employers in the STEM sectors report a lack of skilled talent, attributing this to a mismatch between job requirements and available qualifications. Steven Sim emphasized that the current university model fails to meet industrial demands, stating:
“What I'm trying to say is this: If you are thinking the current university model will be able to fill your job market demand, then you are delusional. Because universities … (are) not created for the industrialised world,” – Steven Sim
Malaysia produces approximately 300,000 graduates each year, with only about 50,000 high-paying, skilled jobs available. One-third of these graduates come from STEM fields, yet many find themselves in roles that do not match their qualifications. This paradox is exacerbated by insufficient language and technical competencies among graduates. The median monthly salary remains at about RM2,700 (US$600), reflecting the stagnant wage growth despite a supposedly worker-driven market.
The government has recognized the need to enhance TVET's attractiveness and accessibility. It plans to target 500,000 student enrollments across 1,398 institutions nationwide this year. TVET courses currently range from levels 1 to 5, equivalent to an advanced diploma or associate degree. Plans are underway to introduce higher-level courses equivalent to bachelor's, master's, and doctorate degrees.
“But industry may not necessarily benefit from such a model of training. Which is why the obsession with making TVET to be like university, I think we should change,” – Steven Sim
A study by the Khazanah Research Institute supports the government's approach, revealing that TVET graduates consistently exhibit higher employability rates compared to non-TVET graduates. The government's Madani Economy Framework aims to "raise the ceiling and raise the floor," addressing the skills-to-job paradox while boosting the economy.
“Raising the ceiling refers to putting in more money to help the economy move up the value chain, with moves like setting aside RM40 billion in this year’s budget to support loan facilities for small- and medium-sized enterprises, and government-linked investment companies aiming for RM25 billion in domestic investments this year,” – Steven Sim
Edwin Oh Chun Kit advocates for a more coordinated effort between academia and industry to bridge the skills gap effectively.
“With greater synergy in these efforts, Malaysia can effectively bridge the skills mismatch, improve labour market outcomes, and drive sustainable economic growth,” – Edwin Oh Chun Kit
“Such a body can ensure academic curricula and training programs are aligned with dynamic, ever-changing industry needs while fixing the gaps that result from inconsistent inter-ministerial coordination,” – Edwin Oh Chun Kit
The shift towards lifelong learning and micro-credentials is gaining traction as a viable solution to adapt to evolving market needs.
“There is this growing recognition of the importance of lifelong learning and the necessity to adapt to evolving market needs," – Amirah
“I think the move forward here, and this is a pattern we are seeing globally, is the movement towards micro-credentials and accredited certifications that happens beyond tertiary education,” – Amirah
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