unemployment-numbers(Coutesy by google.com)

1.0       PART I (Introduction)

1.1       General Understanding of Unemployment

Unemployment happen when people are able and actively seeking to work but unable to get work. This will eventually resulted in the loss of incomes, production and human capital of a nation. High level of unemployment usually occurs during the economy recession where labour supply exceeds demand from the employers. Long-term unemployment severely damages a person’s job prospects by destroying human capital. The degree of unemployment in a nation indicates the economic health of the country. Unemployment rate is used to measure the underutilization of labour resources because it signifies the percentage of labour force that is unemployed but are willing and actively seeking for work. Unemployment rate provides a precise measurement which was assured by The Bureau of Labour Statistics. However, there are several factors that affect the unemployment rate in a nation such as company downsizing, merger or acquisition, changes in technology and foreign competition, and job outsourcing to other nations.

Unemployment can be divided into three parts which are unemployment of frictional, unemployment of structural, and also circle-cyclical unemployment. Frictional unemployment is arising from normal labour market turnover where people are deciding to move among job of the people, careers options and working location. It is known as fixed and healthy conditions which are resulted from the mismatching between workers and jobs. This can be related to the wages, work time, location, personality and skills. On the other hand, structural unemployment occurred during the changes in technology and foreign competition. This can be explained as the mismatch of skills of unemployed workers and available jobs in the market. Seasonal unemployment can be seen as part of structural unemployment too. This kind of unemployment is linked to certain type of seasonal jobs such as fishing, agriculture or construction work. Cyclical unemployment can be related to the dynamics of economic growth and factors of production in the cycle of business. So, when business cycles are at the peak situation, cyclical unemployment will be considered lower than normal unemployment and when business cycle are at their normal unemployment, cyclical unemployment is higher than normal unemployment. Cyclical unemployment arises when the economic is facing recession because the market labour supply exceeds the demands from the employers due to the widespread decreased in spending and consumption in the economy. Cyclical unemployment can be explained as a person lost his job during economy recession and rehired again when the economy experiences expansion.

1.2       Economic Growth and Labour Market in Asia & Malaysia

In Asia, the economy growth trend and labour market outcomes almost similar. The labour market development is one of the most important components of economic transition. The labour market development occurred in both rural and urban areas. In the early years, the economic growth was focused on agriculture and mining sector which occurring in rural area. Somehow, the intense competition of globalization has caused the transformation from agriculture and mining sector to manufacturing and service sectors. Thus, there are large population of migration from rural area to urban area since 1990s due to job creations and opportunities in the urban area. As the economy is growing, there is an increased competition among nations where greater labour market flexibility and good jobs need to be created.

Malaysia is a rapidly developing country in Asia. Malaysia has successfully moved from the chain of raw materials producer toward more dynamics of multi-sector economic expansion. The Gross Domestic Product (GDP) rate in Malaysia averaged high in all time from 2000 until 2012. However, the growth of population grows faster than the employment opportunities generated in the market. Therefore, the problem of unemployment occurred. In Malaysia, the unemployment rate has been stable and low over the years. There are two main factors that contributed to the low unemployment rate in Malaysia which are large corporate buffer and the presence of foreign labours.

Malaysia government should also be aware of the consequences of migration on their own labour market too. The migration can helps to reduce unemployment but it can also twist the local labour supply. In Malaysia, there are a significant number of workers have migrated abroad especially high educated and skilled workers. Many of this population has migrated to other countries because there is a high demand and better job opportunities from abroad for particular skills or professions. This large population of highly skilled workers migration will discourage investment and slow down the economic growth of a country. Therefore, government should take this problem into consideration and resolve with a thoughtful way to encourage the local labours to work and contribute to their own country. This helps to avoid job outsourcing to other countries as well.

2.0       PART II (Economic Background of Malaysia)

2.1       Economic Condition in Malaysia

As known that, Malaysia was considered as the most massive producer of rubber and tin sources and also the palm oil productions. During the colonial rule, British introduced palm oil and rubber trees for commercial purposes. British also allowed the migration of Chinese and Indian to work under mines and plantation sectors in Malaysia. In this case, the British colonial system at the early years has eventually divided Malaysian into three groups according to ethnicity. The Malays living in a poor condition because they are more focused in their traditional villages which their incomes are mainly relying on agriculture activities. The Chinese were dominating the Malaysian commerce while Indians focused on the plantations activities. Somehow, educated or Malay nobleman at that time were giving chance to enjoyed a better social life served as civil servants under the British colonial system. The First Malayan Five Year Plan was introduced in the year 1955 just before Malayan independence with the main objectives of reducing poverty and increase per capita income and living standards of the country. However, after the First and Second Malayan Plan, the plans were re-titled and numbered as the establishment of Malaysia which then begins with the First Malaysia Plan.

The Malayan Five Year Plan has successfully caused the economy in Malaysia to grow at a steadily pace. Malaysia is known as a middle income country which transformed itself from producing raw materials into an emerging multi-sector economy. Malaysia is moving forward to achieve the high-income status in the year 2020 by investing in high technology industry, biotechnology, services and Islamic finance. In order to achieve the status, Malaysia should continue to increase the domestic demand and reduce the reliance on imports. Besides, Malaysia should also increase the amount of exports because they acted as the important components to boost the economy growth. The exports of Malaysia include electronics, palm oil, oil and gas, and rubber. However, oil and gas are the main exporter in Malaysia because they generated the highest profit which allocated almost 40% of government funds. In the year of 2012, Malaysia’s economy is growing at a steady pace of 4% to 5%. This shows that Malaysia has performed well regardless the cause of international uncertainties by the euro-zone crisis, US debt crunch and a slowdown in China. The domestic demand and consumption are growing at 7% whereas the investment is growing at 10%. The domestic demand, consumption and investment act as the main drivers of an economic growth.

There are few reasons for well performance of Malaysia economy regardless the international uncertainties such as placing higher price for certain goods that it produced like crude oil, low inflation and well capitalized and stable banking system. These have helped to increase the flow of capital to the country as investors are looking towards emerging markets and away from troubled economies such as European Union. It eventually helps in sustaining the growth of the Malaysia economy too. In addition, the domestic oriented industries and on-going implementation of projects will also be supported by the Economic Transformation Programme (ETP). This has allowed Malaysia to achieve the developed nation status by 2020 with stronger value-added industries and services, higher incomes and less reliance on inconstant goods earnings. For example, ETP helps to support domestic demand and boost up the consumer confidence which including providing benefits for the poor, tax reduction and bonuses for public sector workers.

Somehow, in the globalised economy, Malaysia will not be isolated from the effects of international financial crisis. For example, the global recession of 2009 which caused by the financial crisis of 2007 to 2008 has affected the entire world economy. Moreover, the European sovereign debt crisis, along with slowing growth in United States and China continues block the world economic growth. The decreasing number of exports will eventually decrease the GDP of a country. Slow economic growth is the main contributor to the unemployment problem because the job opportunities available in the market could not kept pace with the population growth.

2.2       INTRODUCTION TO Unemployment Issue in Malaysia

Long term unemployment creates a massive cost for an individual and economy as a whole. This may results in negative results of income, negative unexpected multiplier effects, oppression of national output, fiscal and monetary costs and merely social cost. The unemployed experiences a decline in the living standards as they have less purchasing power and may involves to debt problems which leads to social problems such as crimes. The unemployment also involves a loss of potential national output as the potential GDP exceeds real GDP; the output gap will be negative due to an increased in spare capacity. High level of unemployment will affect the fiscal costs because government experienced a loss in tax revenue and higher spending on welfare for those who unemployed and this may cause budget deficit in the particular country. Negative multiplier effects happened due to the loss of massive number of jobs during a downturn in the business which affected the other parties such as suppliers or retailers.



3.1       Unemployment Rate Pattern in Malaysia

Unemployment in Malaysia is the emerging and damaging issue which people who are demanding the about the expected jobs but could not find them. The meaning of term unemployment rate means that the percentage of people within labour force who are unemployed divided by the total amount of labour force.

Figure III.II B Malaysia Unemployment Rate during last two decades (85-010)

Courtesy of Data: International Monetary Fund, WMO 2010

Malaysia unemployment can be considered as starkly and positively fluctuating which different far from the worrying trend of unemployment in European countries and United States. Moreover, the unemployment has been relatively stable after the financial crisis. The figure above shows that the Malaysia unemployment rate is relatively stable and fluctuates among the range of 3.0 % to 4.0 % annually within last one decade from 1998 to 2012.

As we know from the figure that the unemployment rate after 1998 or period of Asian Financial Crisis did not influence the fluctuations of Malaysia unemployment rate substantially.   Based on the data from International Monetary Fund about and Department of Statistics Malaysia, the unemployment rate average of Malaysia within last one decade is laid down in the point of 3.3 %. With the highest ratio of unemployment rate in 2009 which almost reached 3.7 %. And the lowest ratio of unemployed ratio was laid down in the point of nearby 3.0 % in 2007.

The dynamics of unemployment rate in Malaysia can be considered as stable and does not fluctuate too extreme and too significant whether in the high or low point. There are certain factors that will be elabourated and discussed below about why Malaysia unemployment rate is relatively stable and starkly during last one decade.

3.2       Factors that Fluctuates Unemployment Rate in Malaysia

3.2.1    Dynamics of Population Amount

The increase of Malaysian populations within last one decade causes the increased amount of Malaysian labour force. However, the increase of labour force is conversely not accompanied with the availability of job opportunities since the human works nowadays are changed by the automated and digitalized machines works, especially in manufacturing industry. Moreover, it causes the local labour forces to increase gradually but they cannot be distributed to the job-related area since the job availability rate remains constant or even declines because of the technological advancement in certain area of industry. This essential reason will affect to the significant increase of unemployed people in Malaysia, especially toward the unemployed graduates. But in certain consecutive year, the unemployment rates in Malaysia can be considered as fluctuating stably between 3 to 4 % annually. The stability of Malaysian unemployment rate within last one decade are relatively stable and in the expected rate because the growth of total population in Malaysia does not increase exponentially. It means that the government and society have a good coordination to control the birth rate, population booms and density in Malaysia. Until nowadays (between 2010-2011) the population sum of Malaysia is around 27.5 million with 3.4 % of unemployment rate.

Figure III.II A Malaysian Population 1980,1991, 2000 and 2010

Source : Department of Statistics Malaysia, Summary 1998-2010

3.2.2        Dynamics of Foreign Workers in Malaysia Foreign Workers as Competitors for Local Workers.

The foreign immigrants in Malaysia are attracted by the low unemployment rates and excess demand of labour force in Malaysia. As well particularly those immigrants come from Indonesia, Pakistan, Bangladesh, Iran, Yemen, Philippines and others. Malaysia is facing the reality that the increasing numbers of foreign workers give some drawbacks toward the competition of labour market in Malaysia. Instead of stimulating competition between the foreign workers and locals to get a job, the presence of foreign workers has impacted to the stress of public amenities in Malaysia such as provision of health services, public and others.

In addition, (Mohammad Arif, 2009) The trend of foreign workers increase in Malaysia is considered as stimulator for the local people to transform them from labour intensive industries orientation toward hybrid modelled skilled industries, like bank and finance sectors, computers and technological sectors, research and development areas and public instrument and infrastructure provision services. Back to the past that rising wages in manufacturing in the early 1990s prompted employers to consider investing high-tech labour saving production methods, only abandon to their plans when the government allowed them to hire cheaper foreign workers. Instead of this past facts and evidences, Malaysia has to expand and enhance degree of local labour skill empowerment and maximisation instead of depending on the presence foreign labour forces to keep the unemployment rate patterns become stable even lower within the relevant and expected range.

               Foreign Workers as A Keeper of Stable Unemployment Rate

Figure III.II C The Presence of Foreign Workers in Malaysia (2001-2007)

Source: Department of Immigration Malaysia

As know that dependency of foreign labour of Malaysia has helped the cases of unemployment during times of Asian Crisis, The number of foreign workers in Malaysia has arisen up from an 850,000 people in 2001 to 1,470,000 people in 2004 and calculated to be 2,045,000 in 2007 and nowadays it reaches to be 2, 7 million foreign workers. It is considered that 1,000,000 of foreign workers in manufacturing sector. This is about two-thirds of the manufacturing sector 1.4 million work-forces in Malaysia. The high correlation and presence of foreign labours has often been related as the reason of Malaysia’s low-wage architecture within last one decade. However, the existence of foreign labour in Malaysia has successfully kept up and managed the unemployment rate become stable-and starkly even more lower within last one decade in the expected range of 3 % to 4 % annually. Conclusion  of Foreign Workers Presence

In conclusion, the presence of more than 2,7 million workers in Malaysia is another pertinent issue. In times of high economy growth, it is ratified that foreign workers have striven for to the rise of economic growth of the country by omitting and smoothening up labour shortages in certain areas of works in Malaysia. Moreover, foreign workers play complimentary roles to domestic labour in covering up and fulfilling the demand for labour market in Malaysia. Directly it helps manage the unemployment rate declines and fluctuates stably within the range of 2.9 to 3.6 % per year within last one decade.

Figure III.II D The Composition of Malaysia Population 2010

Source: Department of Statistics, Malaysia

Conversely during the economic slowdown, however foreign workers tend to be viewed as competitors. During the financial crisis, of the total retrenched workers, the majority were foreign workers. It has also been argued that migrant workers displaced Malaysian. The presence of foreign workers has also put oppression on public provisional areas of works and services, such as the general public services, kind-health and educational infrastructures in Malaysia as a whole.

Finally, regardless of the pitfalls of foreign workers presence in Malaysia, it has been proven that the benefits of foreign workers labour force in Malaysia has successfully kept up the unemployment rate of Malaysia become stable and low. Instead of it, the foreign workers presence has stimulated the local workers to enhance their capability in term human capital to be more skilled workers in the labour market to grow the Malaysian economy rapidly towards the Malaysian Vision 2020.

3.2.3    DYNAMICS OF Unemployed Graduates as A Worrying Trend.

Labour Force Survey of conducts annual survey which proves that the challenge of increment in Malaysian Unemployment rate is caused by the significant increase of unemployed graduates in Malaysia. A local newspaper report (New Strait Times Malaysia, 2005) that in 2005 there were 60 thousands unemployed graduates in Malaysia.  The report drew much attention because it brought into question to the quality of university graduates. Some even went as far as questioning the relevance of university curriculum in the face of changing work environment that emphasizes new skills, creativity, computer literacy and inter-personal communication skills.

It is necessary to highlight that the issue of graduate unemployment is nothing new in Malaysia. What is new and worrying, however, is the persistent nature of the unemployed graduate problem within last one decade in Malaysia. Also, graduate unemployment is of serious concern because of its long term political and social implications. It is commonly argued that the large number of unemployed graduates serve as breeding ground for discontent and political unrest. Furthermore, graduate unemployment is a waste of productive resources. It brings negative results and contribution to the National Economy of Malaysia. As the unemployed graduates of Malaysia increase gradually, it weakens the rate of human capital and labour force from skilled workers in Malaysia.

As a sample of data set, The Labour Force Survey in Statistics Department in Malaysia and study on Strategies to Reduce Unemployment among Graduates (IDS, 2005) reveal the following pattern of Malaysian unemployed graduates within 1998-2005 as follows:

  1. Unemployment among graduates are concentrated in the 20-29 years old.
  2. The majority of unemployed graduates are Malay;
  3. The majority of unemployed graduates are in the urban areas;
  4. Higher percentage of female graduates are unemployed as compared to males;
  5. 92.6 % are from local public institutions of higher learning and 5.3 % are from local private institutions of higher learning

3.2.4    Inflations Rates to Unemployment Rates Fluctuations

The inflation rate also contributes to the fluctuations of unemployment rate in Malaysia. Amir Amri (2007) said that the theory of populous economist from Wellington who known as A.W Phillips appeared because at the time in 1929, there was an economic depression in United States that impacted to the raising of unemployment rate. Based on the macroeconomic theory of Phillips stipulates that there is bonded relationship between inflation rate and unemployment rate. From the observations, it is known that if the inflation rate is high, the level of unemployment is low. It indicates the reciprocal linkage between inflation unemployment rate of people.

Figure III.II B Malaysia Inflation Rate during last two decades (1980-2010)

Courtesy of Data: International Monetary Fund, WMO 2010

A.W Phillips described both relationship based on the assumption that inflation is the reflection of a significant rise in aggregate demand in the general market. With the rise of aggregate demand based on the demand theory, it will increase the price level of productions. Moreover, because of the increase of price level that leads the condition to reach inflation, the manufacturers have to increase their production capacities by adding the labours as known that because labours are considered as main input of productions to increase the productions output As a result of the increase of quantity of labour demanded and the increase of price level that leads to the inflation, it can be understood automatically that the unemployment rate becomes lower and decreases continually. At least but not least, Phillips curve also conveys about the idea of trade-off between unemployment and inflation. If the market wants to get low unemployment rate, market has to increase their inflation but if they want the stable and low inflation rate, the market and government have to adjust increasing the inflation rate within certain periods.

As we know that the inflation rate of Malaysia is dynamic in term of fluctuations of the inflation rate within last one decade. The amount of inflation rates within last one decade were laid down within the scale of 1 to 5 % that can be classified into small scale or soft inflation that actually do not substantially affect the significant fluctuations of unemployment rate in Malaysia. As we know that even the inflation rate raised up into 5 % in 2008, but the unemployment rate was still laid down in the range of 3 to 4 %. Since the inflation level is below 10 %, the inflation is classified as soft inflation that only influence the fluctuations of unemployment rate marginally within period of time.


Unemployment is considered as the damaging issue for the national economy and development in term of GNP, income per capita and productions factors (Jomo & Ishak, 2003) as follows:

  1. Unemployment means that labour force is not utilized efficiently and other factors of production plants and the land factors such as agricultural land are wasted uselessly. This situation would reduce real GNP achieved and this condition will reduce potential GNP < real GNP.
  2. Unemployment wastes the aggregate production factors. It affects that firms are not efficient to manage the productions. The negatives effect toward the national economy is that the budgeted production of firm will not be able to reach efficiently.
  3. As the result of wasting aggregate production factors of the firms, unemployment will turn down and lower the current production of the firms, this situation will led to the impediment of economic growth in the future.
  4. Unemployment is resulted to the subtraction of real GNP and it subtracts to the national income. If the amount of Malaysian populations increase annually but the unemployment remains constant even more increasing, the income per capital will go down subsequently.
  5. Unemployment contributes to the addition of poverty rate to the state. The increase of unemployment rate will prove that the current efforts from government to tackle down unemployment must be improved as well as possible.

Furthermore, unemployment is considered as damaging issue to the national economy because high unemployment may reduce the aggregate income and give the negative impact on the government. It will slow down the economic development progress of Malaysia. The government of Malaysia should provide various solutions, policies and infrastructures to address the problem of unemployment and stimulate the national economy as well as reduce the poverty gap between Malaysian citizens.

In addition, not only considered as damaging issue to the national economy but also considered as damaging issue toward the Malaysian society in term of social perspective. Unemployment causes the unemployed people not to have income and wages for certain period of time. This situation leads them to find incapability to fulfil their daily needs and personal consumptions.  Financial incapability will lead unemployed people to act beyond the boundaries and impose them to do crime such as stealing and robbing. This current situation increases the crimes rate of country and affects to social security.


The challenges of Malaysia Government and Society to reduce the degree of unemployment nowadays are lied on two main things which are as follows (i) the bombastic and massive amount presence of foreigners to study, work and live in Malaysia since they believe that Malaysia is proper and safe country to live, gain wealth and prosperity. As known that nowadays the amount of foreign population almost reach 2,7 million until the latest of 2012 as known 10 % population composition of Malaysia populations as a whole. The presence of foreign labours and immigrants in Malaysia will be the stimulator and also the challenges for local people to strive for the workforce in the long term and short term period

The second challenge of facing unemployment in Malaysia is (ii) the increasing trends of local unemployed graduates who are lack of communication skills, English and language skills and also soft-skills enhancement. There are many multinational companies in Malaysia as the result of free direct investment from foreign and joint-venture country that recruit people not based on their academic capacity. But nowadays the company and corporations tend to hire people who have astounding interpersonal and emotional intelligence that accompanied with strong willingness to foster and sustain the innovative way to make company become not only optimizing the profit but also being captivated and grabbed to the heart of society. It means that they need the people who have often exposure of communicating effectively with people to negotiate and solve the existing case within or inter company.



There are two macroeconomic policies used by government to combat unemployment in Malaysia which known as fiscal policy and monetary policy.

Fiscal policy generally refers to the empirical role of the government to achieve the macroeconomic goals such as stability of economic growth, full employment, increasing amount of aggregate demand and stability of price level in the market. There are two main instruments of fiscal policy which are adjusting the amount of taxation uses and government expenditure to regulate the aggregate level of economic activity. This policy is based on Keynesian economic fiscal policy should be used to stabilize the level of output and unemployment. Specifically, Keynes believed the government should cut the taxes and raise their government expenditures which called expansionary fiscal policy or deficit budget automatic fiscal policy (if it is from the perspective of business cycle) to overcome the problem of economic recession. The Malaysian government influences the economy by adjusting the amount of taxes, transfer payments and purchasing in transfer policy. It is known that when the tax is cut, it will directly arise the amount of disposable income. When the income increases, directly it will increase the amount of aggregate demand that will influence to increase in real GDP. If the firms produce more goods and services because of the increase of aggregate demand in the market, there will be increase in aggregate demand of workers to be employed to work for producing more goods and services needed by the market and therefore lower the demand-deficient unemployment. Furthermore, the increase of aggregate demand of productions and labours will result to the powerful economic growth of Malaysia and fewer firms in Malaysia will be become bankrupt since all of the labour and production resources are utilized well by discretionary-expansive fiscal policy.

Monetary policy is an economic policy which attempts to relieve broad objects of policy – stability of employment and prices, economic growth and balance of payment through control of monetary system, economic open market operation, credit multiplier, operating monetary magnitudes control such as supply of money, level and structure of interest rates and other conditions affecting the availability of credit by Bank Negara Malaysia. Monetarists agree that quantity  of money supplied affects the overall price level, interest rate, exchange rate, unemployment rate and level of output in the market. The kind of monetary policy depends on the Malaysia situation. There are tight monetary policy which restrain the economy and also easy monetary policy which aggressively expand money supply and lower interest rate and also increase the investment.



The labour market aspect is very important for the economy of a country. Without labour market, the business cannot run smoothly and the growth economy cannot move forwards in the future. Then, the nominal market is a searching of employers finds a worker, workers searching for work and where the wages are determined. Other than that, labour market is made up from an interacting labour markets for diverse skills, qualifications, and locations. Moreover, labour supply offers two important benefits. First, because of markets imperfections, it may be possible to increase production through policies to encourage better use of available labour and the adoption of technology. Second, even if total output is not rise, increased employment of poor people can be an effective and relatively low cost way to increase their share of total income, and thus diminish poverty.

Despite of that, for the outlook for Malaysian labour market 2012, it can be seen that the labour market conditions are expected to soften in 2012, along with the slower economic activity. Other factor that affects labour market is technology. Technology gives the effect towards labour market in the future. The changes in technology will change the skill needed to perform jobs. When technology rises, the labour market will drop. So, many people loss job because of new technology arise and unemployment will increase. Next, recession give negative impact to the labour market of the country. This is because when recession happens, the demand of labour decreases because the employer wants to cut cost but unfortunately the supply of labour unchanged. This thing happen because employer that run the business want to cope with the cost of production and to get as much profit as possible in this crucial time.

Therefore, because of these factors, labour market condition cannot be maintained to be good until 2020. There is an upside down factor that affect the smoothness of the movement that happen in the labour market. The outlook for Malaysia market in 2012 is softening along with the slow growth of economy. This situation will continue to be worst if recession happens but will getting back to normal if the recovery phase can be done accordingly with proper plan. So, what can be concluded here is in 2020, the economic growth can grow faster only if program that country plan to meet the vision 2020 is implied accordingly.

5.2 Malaysian Economics Transformation Program 2020 (METP Vision 2020) as OUTLOOK OF MALAYSIAN MARKET IN THE NEXT 10 YEARS

            Malaysian Economic Transformation Programme (METP) is a comprehensive effort to make Malaysia turn into a develop country when reach 2020.  This is other initiative for Malaysia to have high earnings in economy sector by the year of 2020. Other than that, this effort has the same line with the National Economic Model (NEM). Furthermore, the aim of this program is to move and strive for the Malaysian economy to become one with high GDP, per-capita and well distributed income and astounding quality growth in 2020. Besides that, METP wants to enhance and encourage Malaysia to advanced-nation status with completeness and sustainability by eight Initiatives of Strategic Reforms. The eight strategic reform of initiative are known as re-fresh and energise the Malaysian private sector, creating a competitive atmosphere of national economy, enhancing the power of public sector, making the transparencies of market and direct marketing affirmative action. Enhancing and empowering better quality of labour forces and deducting the presence and depending linkage on foreign labour. And lastly is enhancing sustainability of local growth and local labours, establishing the knowledge fundamentals of facilities and sustaining the growth resources.

Other than that, because of effort of this program, the economy of this country can turn much better because there is a prediction and analysis that had been made for the future. Transformation is very good for the economy of the country to cope with the changing era and time because it moving with the flow of technology and such. Because of Malaysia is currently pursuing to be a developed country, this program is very good to implied to give the benefit to the country as well as the nation. Moreover, all the negative impact on the country also can be reduced by using the plan of that program.

Despite of that, benefits realizing this program is the unemployment can be reduced. This is because when the economy of the country growing faster, it open more opportunity in the labour market. In this situation, when business expand, employer need more worker and people that is unemployed will have a greater chance to get a job and eventually the production of the business will increase and indirectly give a good impact to the economy. Because of this, it also can strengthen Malaysia in global market and Trading. When this happen, Malaysia will become a develop country in 2020 with no doubt.

6.0       SUMMARY

            In conclusion, there are four main points that are considered as the main parts in this project paper that led to be elaborated in each subsections of the part above. Those four important part are as follows (i) unemployment rate fluctuations pattern in Malaysia during last one decade (ii) the various factors which fluctuates unemployment rate in Malaysia during last one decade (iii) the outlook of Malaysian job market during next 10 years and the development of Malaysian Economics Transformation Programme (METP) (iv) how damaging is the issue of unemployment in national economy of Malaysia.

The first concern is about fluctuations of unemployment rate in Malaysia within last one decade, the paper has shown that the fluctuations of Malaysia unemployment rate can be considered as stable and starkly which laid down within the relevant range of 3 to 4 % from 1998 to 2012. The stable and positively stark fluctuations of Malaysian unemployment are influenced by the second main points which known as some factors such as the presences of foreign workers, dynamics of population amount, the increase and trends of unemployed graduates and the dynamics of inflation-economic growth trend in Malaysia.  Moreover, one of the factors that is the presence of foreign labours are successfully keeping the unemployment rate become stable since they are fulfilling the excess labour demand of Malaysia and alleviating the labour shortages in certain sectors of work.

In addition, the third main point is about the outlook of Malaysian job Market in the next ten years are very diverse, competitive and prosecuting the people to be the part of creative and innovative economic grower to reach the objectives of Malaysia Economic Transformation programme. Furthermore, the outlook of Malaysia job market is not only to develop the country to be new developed country but also how to be astounding to grow the concept of sustainable development in Malaysian economic sector.

Besides that, the fourth essential point discusses about the importance of unemployment as damaging issue in national economy of Malaysia. As known that unemployment is considered as damaging issue to the national economy because high unemployment may reduce the aggregate income and give the negative impact on the government. It will slow down the economic development progress of Malaysia. The government of Malaysia should provide various solutions, policies and infrastructures to address the problem of unemployment and stimulate the national economy as well as reduce the poverty gap between Malaysian citizens.

Finally, analysis of the four main parts about dynamics of unemployment in Malaysia are provided with the real facts, elaborations of proof, analysis of the in-depth problems preceded by the real examples and analogies that ease people to understand easily.

7.0       REFERENCES (arranged in alphabetical orders)

Plagiarism Detection : 2% by Turnitin.com

  1. Abd Rahim Abd Rashid, S. H. (2005). Career Development and Unemployment Problems in Malaysia :Crisis of education and training. Kuala Lumpur: Utusan publications and didtributors sdn bhd.
  2. Alghofari, F. (2011). Analisis Tingkat Pengangguran di Indonesia 1987-2007. Final Thesis of Bachelor of Economics, University of Diponegoro, Semarang.
    1. Allen, S. (1986). The Experience of unemployment. Macmillan in association with British Sociological Association.
    2. Baharin, Norhayati, Y.Ishak, & R, I. (2012). Factors Influencing Unemployment in Malaysia. Paper presented at the Prosiding Perkembangan Ekonomi Kebangsaan Malaysia ke VII, Kuala Lumpur
      1. Baharumshah, A. Z., & Rashid, S. (1999). Exports, Imports and Economic Growth in Malaysia: Empirical Evidence Based on Multivariate Time Series.Asian Economic Journal13(4), 389-406
      2. Berma, M. (2009). Labour markets and employment in Asia : emerging issues and challenges.
      3. Clark, K. B., Summers, L. H., Holt, C. C., Hall, R. E., Baily, M. N., & Clark, K. B. (1979). Labour market dynamics and unemployment: a reconsideration.Brookings Papers on Economic Activity1979(1), 13-72.
      4. Drabble, J. H. (2000). An economic history of Malaysia, c. 1800-1990: The transition to modern economic growth (p. 132). Basingstoke: Macmillan.
      5. Harris, J. R., & Todaro, M. P. (1970). Migration, unemployment and development: a two-sector analysis. The American Economic Review, 126-142.
      6. Hon, T. C. (2007). Immigration Pattern of Skilled Workers in Malaysia: A Sectoral Analysis. Malaysian Journal of Economic Studies, 44(1), 123-120
      7. Mamat, M. I. (2011). Masalah Pengangguran di Malaysia : Kesan Terhadap Negara dan Cara Mengatasinya. Coursework Exercise. School of Social Sciences. Universiti Sains Malaysia. Kuala Lumpur
      8. Nasir, M. N. M., Hwa, K. M., & Mohammad, H. (2009). An Initial Study on the Forecast Model for Unemployment Rate. Journal of Asian Business and Management Studies, 20(4), 17
      9. Saad, N. M., Hasan, S., & Yusoff, W. S. W. (2004). Macroeconomic Applications in South East Asian Countries : Conventional and Islamic Perspectives. Kuala Lumpur: Research Center of International Islamic University Malaysia.
      10. Sharma, A., & P.Mamgain, R. (2009). Challenges of Unemployment in Malaysia Labour Markets and Unemployment in Asia : Emerging Issue and Challenges (pp. 127-143). India: Danish Books.
      11. The Edge Malaysia (October, 2009) Online Database. Foreign Labour Keeps Malaysia Unemployment Lower. Retrieved from http://www.theedgemalaysia.com/sports/151220-foreign-labour-keeps-malaysian-unemployment-low.ht




    1. 1.     FIRMANSYAH SHIDIQ WARDHANA                (CEB110723)
    2. 2.     KHAIRUL AZRI AZIZAN                                     (CEA110034)
    3. 3.     MOHD RUSHDAN BIN MOHD RAMLI              (CEA110131)
    4. 4.     SHERENE TAN HSU HSIEN                                (CEB110067)




    SEMESTER I – SESSION 2012-2013

get writer contact through firmanthemaster@gmail.com or http://www.firmansyahsw.blogspot.com


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