Monday, September 5, 2016

Youth Mainstreaming: Economic Perspective

From my Official Facebook Post (13 Aug 2016): 

Last weekend DAPSY (DAP Socialist Youth) had a successful political education summit. 

DAPSY National Executive Committee

I wasn't able to join them due to commitment at constituency. However, I made a short trip to attend the meeting of DAPSY National Committee and to join my comrades (Rajiv, Nurman, Bryan and Yoke Kong) to speak in one of the forums: Youth Mainstreaming: The technical perspective & Economic Case. 

Panel of the Forum 

Here is a short note of what I shared:

1. Malaysia is in a period which we should take advantage of "demographic dividend" - people coming to workforce is more than those who retire. In normal (or even not too bad circumstances), the economy will expand due to demographic change. But are we taking full advantage of this window of opportunity? Or will we let this generation pass without making a signifcant breakthrough? 

Showing the Demography Chart 

2. The youths today are facing problem with low and even more depressing, stagnant salary growth. According to the Edge, (from the extrapolation of statistics from the EPF), average wage grew only 3.9% per year over the last 4 years, well below 6-7% during 2000-2008. With increasing inflationary pressure, the real wage is in fact declining. (I didn't have time to talk about how low wages in Malaysia also coupled with high cost of living especially on mobility, i.e transport and public transport, which we could do so much better and cheaper. This leads to very low saving rate among average working youths, which in turn hinder wealth accumulation. Without intervention, the wealth inequality will increase among the haves and the have-nots for this generation.)

Explaining Labour Productivity 

3. Salary growth needs to come from productivity growth otherwise we'll lose out our businesses/capitals to global economy (business may invest elsewhere where labour cost is cheaper). However, the ratio of quantity and quality labour input to GDP has not changed since 2006 at 89:11. (We have not been able to improve labour quality). 

4. To improve productivity, we need effective microeconomic policies to create a business environment that rewards enterprise, innovation, technology and skill training. We also need to provide resources needed for firms to identify business opportunities and take advantage of them. In addition, we need macroeconomic stability, sound institutional arrangements and good infrastructure to provide the core where individuals and firms can plan and invest.

5. For Malaysian youths specifically, youth unemployment is higher than national average ~10% vs <4 1="" 3="" 4="" 6="" a="" after="" among="" and="" are="" as="" assembly="" at="" big="" bigger="" can="" commitment="" development="" does="" employability.="" employability="" english="" federal="" first="" focus="" for="" fruits="" government="" graduate="" graduates="" graduation.="" have="" i="" improve="" in="" intensive="" is="" it="" job="" level.="" low-hanging="" main="" mismatch="" mistmatch="" months="" much="" nbsp="" needs="" not="" on="" our="" p="" problem="" raised="" reason="" reasons:="" requires="" s="" scale="" selangor="" shown="" skills.="" skills="" soft-skills="" state="" studies="" that="" the="" to="" training="" unemployment="" which="" worrying="">

6. In addition, we need to note that only 30% of the labour force in Malaysia have tertiary education, more than 50% only have secondary school education. To increase the salary of average young Malaysians, governments need to increase upskill trainings or incentivize firms to do so. For example, the Penang Skills Development Centre (PSDC) runs the German Dual Vocational Training (GDVT) Programme in Mechatronics, which is designed to upskill the existing technical workforce and school leavers with international-level skills and competencies. We need to develop our vocational and non-academic education in a more sophisticated manner. Federal and state governments have different programs for upskill and vocational training but a more coordinated action is needed with strategic goal in mind. (Now it's like all over the place.) 


7. I ended my speech by sharing my concern with the young comrades that Malaysia may lose out to Vietnam in 10 years. Vietnam students continuously outscored Malaysia students in Program for International Student Assessment (PISA), an international assessment of 15 year-old students for science, maths and reading. In the latest result, Vietnam achieved 12th in the overall ranking based on maths and science while Malaysia tail behind at 52 out of 76 participating countries. While international media is running the news of our country biggest corruption scandal of 1MDB, the latest issue of The Economist ran news on Vietnam rising economy.
1. http://www.economist.com/news/leaders/21703368-vietnams-success-merits-closer-look-other-asian-tiger
2. http://www.economist.com/news/finance-and-economics/21703376-having-attained-middle-income-status-vietnam-aims-higher-good-afternoon-vietnam

8. Where to Malaysian youths? Act quickly, work hard, both poltiically, economically and professionally, or we'll lose out. "Lost generation" shall not describe us, buck up guys!