Page 185 - Contributed Paper Session (CPS) - Volume 8

CPS2232 Syafawati A. R. et al.

Underemployment: a review of methodology
Syafawati Abdul Refai, Sharuddin Shafie
Department of Statistics, Malaysia

Abstract
Malaysia’s labour market has already reached full employment with annual
unemployment rate below 4.0 per cent. However, low unemployment rate is
inadequate to reflect as a good labour market in an economy. One of the key
indicators that measure a good welfare in a labour market is low
underemployment rate which implies that the economy has met the need for
employment in the country. A high underemployment rate will lead to a
setback on government’s vision to achieve a high income nation by 2020. The
purpose of this study is to identify the most suitable method for
underemployment within graduates in Malaysia’s labour market by using time
series data from Labour Force Survey and Salary and Wages Survey for the
period 2010 to 2017. The methodology used in this study is based on Surveys
on Economically Active Population: Employment, Unemployment and
Underemployment: An International Labour Organization (ILO) Manual on
Concepts and Method (Geneva, 1990). Findings of this study suggest that the
best method to measure underemployment within graduates is Income-
Related Inadequate Employment and thus can be use by the government for
policy formulation and monitoring the national economic performance and
social development.

Keywords
Underemployment; inadequate employment; unemployment; labour market

1. Introduction
The structure of the Malaysian economy has undergone rapid changes
since independence in 1957. This has been the result of deliberate economic
policies developed and implemented by the government to meet the needs
and circumstances of each of its development phases. Malaysia’s economy
continues to expand and is currently the 3 largest economy in Southeast Asia
rd
with an annual Gross Domestic Product (GDP) growth rate of 5.9 per cent in
2017. Due to buoyant economic conditions, the Malaysia’s labour market
underwent equally significant transformation. In 2017, the labour force
comprised 15.0 million persons with the Labour Force Participation Rate (LFPR)
at 68.0 per cent. Of these, 14.5 million were employed while the remaining

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