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1.0 INTRODUCTION
Human manpower resources, which are potential and competitive in developing economic
of a country, are needed in this globalization era. Even though it is not written in any company
statement reports of any organization, this type of human capital is important in determining the
performance of an organization in the country. Without qualified human capital resources, a country
becomes weak as the lack of human factor that can initiate new initiatives in socioeconomic
activities. However, producing human capital resources that are comprehensive and at a world class
level is not an easy task and it is a challenge to Malaysia. Currently, unemployment among the
graduates becomes an issue, not only in Malaysia but also in entire world.
The Department of Statistics Malaysia (2011) found that the unemployment rate in
Malaysia had increased from 3.2 % in 2007 to 3.7% in 2009. Human Resources Ministry, Fong
Chan Onn, stated that the National Economic Action Council with the collaboration of the
Department of Human Manpower had conducted a census in 2005 and they have found that 59000
graduates and diploma holders were unemployed after their graduation and 30000 graduates worked
in a field that does not related with their higher educational qualifications. Based from resources of
job vacancies and job placement in Peninsular Malaysia in 2012, it is revealed that job vacancies
are increasing from year to year. However, these job vacancies are filled by only a part of the
workers. This shows that the unemployment issue is happened not because of the lack of job
opportunities instead it happens because of other factors such as the low quality graduates produced
countries like the United States and other countries in Europe, it is not an issue to be neglected as
this paper aims to identify factors that lead to the unemployment issue among the Malaysian
graduates and hence it can hopefully become guidelines in resolving this problem from occur more
rapid.
1.1 THEORETICAL FRAMEWORK
is influenced by several factors. Nasrudin (2004) in his article mentioned that there were six factors
that influenced the rate of unemployment of fresh graduates in Malaysia 2016. The factors were: a
rapid increase of graduated workforce, lack of training for work preparation, rapid increase of the
population rate and rapid decrease of the mortality rate, educational development, economic
MALAYSIA 2016
As technology increases these years, its been easier for all the students to enrol into
university and pursue their higher education especially in a private university. Therefore, the rate of
fresh graduates produced increases year by year thus provides a large force of graduate workforce
available in the market. When rapid increase in graduate workforce occurred, thus the availability of
the job in the market is limited. This cause the rate of unemployment of fresh graduates increases
yearly.
1.2.2 Lack of training for work preparation
Institutes of higher education nowadays are more on syllabus basis. They focus on educating
teenagers according to topics and chapters in a book. A students achievement is merely being
judged by their examination result, grades and CGPA which is all examination bases. Thus the
student themselves start to neglect the purpose of higher education which is to prepare themselves
to cope with working world and they are more focused on studying theory and memorizing stuffs
for examination. Therefore, the fresh graduate that is being produced is lack of training for work
1.2.3 Rapid increase of the population rate and rapid decrease of the mortality rate
Rapid increase of the population rate but mortality rate decreases also causes fresh graduates
to be jobless. This because there is limited job vacancy is offered daily in the country. If those that
is working till old, then the new generation will never get chance of applying that particular job.
Besides, employers prefer employees with experience which means those that has worked for years.
This requirement actually reduces the chances of a fresh graduate to apply a job at the moment.
Besides, rapid increase of population rate means the population of fresh graduates increases too.
Therefore there are abundant amount of fresh graduates man force capital is available in market but
the job vacant is very less. This actually causes the rate of unemployment of graduates to increase.
1.2.4 Educational development
Educational development in Malaysia is also one factor that affects the rate of
unemployment of fresh graduates in Malaysia. The main factor to the unemployment problem
among graduates is the failure of higher education institute to ensure the syllabus or curriculum
consistent with the matters required in the job market (Utusan Malaysia, 18th May 2005). The
universities failed to provide curriculum and components of educational field that is required in
workplace skills. This causes difficulties among the graduates to obtain job that match their skills
and qualification. Basically they are unable to implement what they studied in institute in real life
working field. This causes companies not preferred to hire fresh graduates from university and they
added the requirement where employees need to have few years of working experience.
Economy factor also one of the main reason fresh graduates are being unemployed these
days. For many years, the manufacturing sector has been the strongest sector in the country until it
is now being progressively replaced with service sector due to technology development. The
services sector requires people who do not only possess the right technical knowledge, but also
those who possess the right soft skills interpersonal, communication, wisdom, maturity and are
business oriented. But due to technology era, manpower is being replaced with computers and so
on. This causes unemployment rate of fresh graduates increases. Besides that economic recession
would also cause fresh graduates to be unemployed. A recession will lead to drop in consumer
spending, affecting the business which lay off workers due to losses. A recession occurs when there
are two or more consecutive quarters of negative gross domestic product (GDP) growth. This means
economic growth is slower during these periods which lead to fall in sales, stock prices incomes and
maybe bankruptcy also. Thus the rate of unemployment of graduates increases during these periods.
1.2.6 Capability of graduates
The capability of graduates is being questioned and this is one of the main factors of
education part, these graduates failed to improve their soft skills qualities such as technical skills,
problem-solving skills and communication skills, especially in English language and also in the
proactive, self-confidence and interaction skills which is important in working life. Thus this causes
employers not to prefer to appoint a fresh graduate in working places. They prefer someone with
experience as those employees are well known with working environment. Besides that, graduates
find it hard to cope with new working environment once graduated as what they studied and what
they implement is two different things. Furthermore, these graduates are lack of confidence during
attending interviews because they have never gain experience in such a situation. All these leads to
Rahmah et al. (2011) mentioned that one of the factors that contribute to the unemployment
problem among the Malaysian graduates is the quality of the graduates. There are employers in the
industry, who gave negative comments on the graduates and mentioned that the graduates do not
have the suitable skills and qualifications, which meet the needs of the industry. Besides, the
graduates are weak in the aspect of employability skills and do not show a good working
performance. A study conducted by Central Bank of Malaysia (2002) also found that the Malaysian
graduates are less skilled as compared to the international graduates. The skills include technical
skills, problem-solving skills and communication skills, especially in English language. Ranjit
(2009) mentioned that ten primary weaknesses of Malaysian graduates are in the aspect of
self-confidence and interaction skills. These aspects lead to the difficulties for the graduates in
obtaining jobs, which meet their qualifications. There are also job industries reporting that the
reason for job vacancies in a working field is because of lack of candidates, who are qualified for
the posts. This is shown from a report by National Associated of Manufactured (NAM), in which it
is revealed that there are gaps exists in the range of skillfulness in almost all of the working fields
the post as the candidate do not meet the requirements by the industry. Subsequently, the graduates
are facing problems in gaining a place in a working world, as they are not able to compete and give
a full commitment to a work. This matter is regretted because the inability for the Malaysian
graduates to fulfill job vacancies in Malaysia resulting in the hiring of foreign workers. Currently, a
good academic achievement is no longer a guarantee for the Malaysian graduates to get a job (Noor
Azina, 2011). It is a benefit for the graduates but it is not a guarantee for them to be given jobs.
Since there is a big gap between the quality levels of the Malaysian graduates with the
international standard, this matter needs to be handled in order to ensure that our country has
skilled, versatile and marketable graduates (10th Malaysian Plan, 2010). Based from a human
capital theory by Becker (1964) it is stated that human capital that has a high knowledge and skills
contribute to the increase of the countrys economic productivity. Becker (1964) also stated that a
high investment in producing useful human capitals is important as long as it give high and positive
impacts to the economic productivity. Therefore this study is conducted to know what causes the
rate of unemployment among graduates in Malaysia so that this problem can be cope by 2020.
1.4 Objectives of the studies
The objectives of this study are divided into two parts which is general objective and
specific objectives. The general objective and specific objective will be identified in the following.
The general objective of this research is to study the factors that influence the rate of
The rapid increase of graduated workforce, lack of the relationship between educational institutions
and the industry, lack of training for work preparation, rapid increase of the population rate and
rapid decrease of the mortality rate, educational development, economic recession, and capability
To identify the rapid increase of graduated workforce will affect the unemployment rate of
To identify the negative impact caused by lack of training for work preparation of fresh
To identify the rapid increase of the population rate and rapid decrease of the mortality rate
Malaysia.
To determine whether the economic recession affects the unemployment among the fresh
To measure whether the capability and quality of graduates will affect the unemployment
The significant of the study is to overcome the increase in rate of unemployment of fresh
graduates in Malaysia year by year. This research also gives a benefit to graduates to find the factor
of unemployment and develop their self in the particular field during job search. Thus this will
The scope of this study is segmented to the fresh graduates in Malaysia year 2016. To be
specified we will only take count of fresh graduates from ALUMNI UNIMAS for more detailed
information during their job seeking moment. Location will be in Kuala Lumpur as currently we are
limited with resources, time and cost. So Kuala Lumpur will be the perfect location of study as it is
the city centre where graduates from all over Malaysia seeks job.
1.7 Limitation of Study
There were some limitations with respect to the analysis and data that may affect the
Due to sample size, a small sample size has a greater probability that the observation just
relationships from the data, as statistical tests normally require a larger sample size to justify that
Besides, the questionnaires that fill by respondents would have some bias. It would be more
accuracy if the researcher can interview respondent directly. Furthermore, it would have some
difficulties to approach the respondents because they felt weird upon strangers and give cooperation
Moreover, it would be difficult to get the questionnaire all back as some of the respondent
do not realize the important of the research and did not wanted to fill the questionnaire as
Finally, cost and time became a heavily limitation to complete this study. Taking a good
respondents sample would have been indeed a costly and time-consuming activity. If cost and time
were allowed to be increase, greater volume of respondents participate in this study and thus the