Page 192 - Contributed Paper Session (CPS) - Volume 8

CPS2232 Syafawati A. R. et al.
market. The adjusted unemployment rate is basically calculated by adding the
total underemployed person to total unemployed person and can be used to
reflect the real issue in the economy particularly in labour market. Malaysia
economy has reached full employment with average unemployment rate
below 4.0 per cent. However, based on this study indicates that there exists an
underlying issue on the labour market where the average adjusted
unemployment rate between 2010-2017 was 5.1 per cent.
This study is set out to determine the best approach in measuring
underemployment of graduates in Malaysia’s labour market. The current
recommended approach by ILO is time-related underemployment due to the
data availability and practicality in most countries. However, time-related
underemployment does not comprehensively explain the underutilization of
labour market particularly in a job where the normal duration of work is less
than the cut-off point. In line with the government aspirations to achieve a
high-income nation by 2020, an income-related inadequate employment
should be considered to be as a method to measure underemployment. This
is because employed person tend to seek other or additional job when the
income received is inadequate to cover the cost of living.
Empirically, this study found that the variance between time-related
underemployment and income-related inadequate employment is relatively
low, where both approaches show a similar trend in the underemployment
rate between year 2010 and 2017. Despite both approaches show a decreasing
trend, it is still imperative to have a new indicator to complement the
unemployment rate in measuring labour underutilisation and thus can assist
in building a better understanding of the true employment situation.
Based on the findings of this study, the skill-related inadequate
employment shows an increasing trend between year 2010 and 2017.
However, this does not necessarily mean an increase in inadequate
underutilisation as skill utilisation is extremely difficult to measure, as it involve
an evaluation of the quality of the jobs against the skills of the occupant.
Furthermore, there is a limitation in determining the levels of occupation of
the incumbent as it relies on the enumerator’s knowledge and understanding
on the job description provided. Moreover, the determination of skill
underutilisation threshold is a complex procedure as it may be necessary to
establish different thresholds for different occupational groups or different
economic activity.
The result of this study suggest that there are two approaches that can be
used in measuring underemployment: a) time-related underemployment; and
b) income-related inadequate employment. For the purpose of international
requirement, the ILO recommended the use of time-related
underemployment approach due to its practicality and data availability.
However, the time-related underemployment approach does not

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