Young may play decisive role in GE13

COMMENT Young people, constituting a substantial share of Malaysia’s 2.4 million new voters, are expected to be play a decisive role in the fast-approaching GE13. What might be on their minds? How have their lives been the past five years?

Socially, Malaysian youth largely reject race-based politics and are more concerned about personal and collective well-being. Among issues in the economic sphere, the ones that stand out include graduate unemployment, student loan and car loan burdens, high turnover in jobs, low salaries, and deficiencies in academic abilities, communication skills, resourcefulness and confidence. The picture is at once bright and promising, and grim and sobering.

Young people are actively courted by both political alliances, with Barisan Nasional offering more book vouchers for university students, BR1M for singles, and transformation of vocational schools, while Pakatan Rakyat pledges free education, vigorous expansion of vocational schools and technical universities, abolition of the University and University Colleges Act, and lower car prices.

Both manifestos highlight improvement in education quality and increased delivery of affordable housing.

The situation is complex and multi-faceted, and is characterised by lack of information. Undoubtedly, we have some inkling that all the above issues are important to young people, but we know little of their actual, material situation.

One economic problem, however, can be documented, and demands our attention: the staggering contraction in real wages of young workers in recent years. It is important to highlight this because the trend forebodes ill for our nation’s future, and because of what we might call “odd-one-out syndrome” - young people who are bearing with low wages may feel themselves the anomaly, or the outlier in statistical terms, while others are presumed to be doing better.

After all, with so much negativity coursing around, young workers may well feel that low wages are their lot.

My calculations of Employees Provident Fund (EPF) accounts demonstrate that salaries of the average young worker - not the odd one out - have been repressed. At the same time, EPF accounts of middle-aged workers have been steadily growing.

These findings draw on data of 6.3 million active EPF account holders, of which 1.5 million are aged between 16 and 25, published in the EPF’s Annual Reports. It is as large a sample as you can get, basically representing formally employed private sector workers. Dividends and contribution rates do not vary across age groups, so differences in salary growth is driving these disparities between the young, middle and elderly.

It’s a problem at least a decade in the making. From 2004 to 2008, real average EPF savings (after accounting for inflation) shrank by 2.6 percent per year for 16-25 year-olds and by 3.4 percent for 26-30 year-olds.

Slower wage growth for young workers was compounded by their taking a disproportionate hit during the 2008-2009 Global Financial Crisis. Over 2008-2011, 16-25 year-old workers again suffered a real decline in EPF savings of close to one percent, while those aged between 26-35 registered about 0.7 percent growth, while accounts of workers above 36 years grew by close to 3 percent.

It has not always been this way. During the period 1991-97, EPF savings of 16-25 year-olds grew by 11.9 percent annually, higher than all the other age brackets, including 41-45 year-olds, whose accounts grew 8.3 percent.

Disproportionate losers?

How did young workers go from being disproportionate gainers to disproportionate losers of economic growth?

We commonly use the argument here that low productivity determines low wages. Young workers, with poor English, cognitive and technical skills, lax attitudes and so on, bring it upon themselves.

These are real, shared problems, and there is a meaningful degree of individual and parental responsibility over their prevalence.

But this is also a systemic problem with deep roots. After decades of Umno-BN disempowering young people and browbeating them into compliance, conformity and external discipline, can we expect them to be confident, creative and self-disciplined? This requires a fundamental shift in mentality and style, away from BN-style command and control.

Another systemic problem is the persistent, entrenched low-wage, low-skill regime from which we need to break free.

Over the past five years, in spite of transformation agendas, vacancies listed with Jobsmalaysia consisted of 62.5 percent lowest wage elementary jobs and agricultural workers, 25.8 percent low-to-middle-wage clerical, production and service workers, and 11.7 percent higher wage technical, professional and managerial positions.

It is not just the type of occupations on offer for young workers, but also the shift to hiring contract, foreign migrant labour.

Data here is also obscure, but my calculations from Malaysia’s Annual Survey of Manufacturing Establishments show a systemic expansion of contract workers at the expense of regular workers. Full-time contract workers as a share of total full-time employees steadily rose from 5.4 percent in 1999 to 8.7 percent in 2004 and 12.2 percent 2009.

This shift is most probably larger than what the survey captures, and is more likely to affect young workers, especially those without advanced educational attainments.

What is the relevance of all this to GE13? Access to tertiary education remains a top priority in election platforms, with the struggles of tertiary graduates and considering that 20 percent of 18-19 year-olds enter the workforce annually with only an SPM certificate.

Pakatan has committed to funding tertiary education and generously expanding technical institutions, alongside increased academic freedom and empowerment of teachers and educators. That to me holds out brighter prospects than BN’s bubbly rhetoric executed by an irredeemably control-minded education regime.

On the job front, Pakatan’s projected 1 million new jobs makes for a more realistic target, and gives more scope for these being good jobs, compared to BN’s otherworldly promise of 3.3 million. With such massive quantities, quality has to suffer.

Pakatan also commits to a reset in tripartite relations, toward fostering more cooperative and progressive interactions between employers and unions, facilitated by the government, while BN’s silence on these matters reflects a willingness to retain the current system thriving on vulnerable contract labour and job insecurity.

The current state of education and labour markets is especially lousy for young people. We really ought to do better.

LEE HWOK AUN is a senior lecturer in development studies at Universiti Malaya. This article was first published in KiniBiz.