Navigating youth dilemma: Challenges of economic transformation

MALAYSIA’s economy is at a critical juncture. The global landscape is shifting at a breakneck pace, and Malaysia must adapt to stay competitive.

Once driven by mining and agriculture, the economy now faces challenges to keep up with multiple rapidly evolving industries, such as green energy and digital innovation, all of which require a strategic shift to sustain growth and global competitiveness.

Malaysia faces the possibility of premature deindustrialisation, which could hinder the development of high-value sectors. This would impact employment and the economy’s global competitiveness, potentially trapping the country in a low-income bracket.

The transition to a digital and green economy is an opportunity and a challenge. Automation, artificial intelligence (AI) and renewable energy are transforming industries, and Malaysia needs to prepare. Without action to reskill the workforce and embrace these changes, there is a risk of job losses and social challenges.

The stakes for Malaysia’s youths are high. They face a future where the job market may evolve rapidly. Their skills need to stay relevant, and opportunities must be secured. Without urgent and decisive action, Malaysia risks creating a lost generation that will be trapped in economic insecurity, with no clear path forward.

AI, automation and green transition are evolving rapidly. In the next five years, about 25% of global jobs may change drastically or disappear. Malaysia faces a bigger challenge: 54% of current jobs could be automated in the next 10 to 20 years. Most at risk are semi-skilled jobs, with 80% of vulnerable positions held by Malaysians.

As Malaysia moves into new industries, the country is facing a potential skills gap in its workforce. Youth unemployment is three times higher than the national average, showing that many young Malaysians do not have the skills needed for today’s job market. This leaves them at a crossroads: They could end up in jobs that do not use their full potential or they could unlock huge opportunities if they get the right skills.

The Higher Education Ministry reported that employability rates for TVET (Technical and Vocational Education and Training) graduates have jumped from 65.5% in 2010 to 94.0% in 2023, with 16.3% of these graduates becoming entrepreneurs.

However, experts warn that there is still a big mismatch between the skills people have and what employers need.

For example, while more than 70% of graduates are aiming for office jobs, most of the available positions – about 60% – are in semi-skilled roles. This mismatch could hold back
the growth of important industries such as manufacturing.

The Malaysian Investment Development Authority’s (Mida) data reveals a clear shift towards advanced manufacturing, as outlined in NIMP (New Industrial Master Plan) 2030. This strategy supports the government’s overall economic goals, including net-zero emissions and emphasis on digital services and green tech.

In 2023, Malaysia’s manufacturing sector saw a huge 80.2% jump in foreign direct investment, reaching RM152 billion.

This misalignment is particularly troubling as Malaysia rolls out ambitious national roadmaps like the National Energy Transition Roadmap (NETR) and NIMP 2030. These initiatives are designed to propel the country toward a future of high-value industries, digitalisation and sustainability.

The NIMP 2030 envisions a competitive industry with high economic complexity, requiring a skilled workforce to advance in areas such as advanced automation, robotics and green technologies.

Similarly, the NETR aims to increase Malaysia’s renewable energy capacity to 70% by 2050, demanding a significant upskilling of workers to meet the needs of green hydrogen, bioenergy and carbon capture technologies.

The National Semiconductor Strategy also underscores the need for a highly skilled workforce to move beyond back-end processes and into cutting-edge semiconductor design and advanced manufacturing.

It is essential to reflect on the nation’s rich history and the future we are collectively shaping. Just as the country once forged its identity through the integration of its many historic challenges, today’s youths must similarly work together with policy makers and industry leaders to navigate the crossroads of economic transformation.

As Malaysia stands at a crossroads, grappling with the indigestion caused by a mismatch between education and employment, the Youth Economic Forum 2024 by Perdana Fellows Alumni Association offers a much-needed remedy.

By engaging directly with leaders, sharing innovative ideas and shaping policies, youths
can transform this moment of uncertainty into one of action.

The writers are affiliated with the Youth Economic Forum Secretariat.

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