Social Mobility: What Really Holds People Back?

Most children today are better educated than their parents, but much fewer enjoy better income

Social mobility of children compared to their parents across education, occupational skill, and income, Malaysia, 2016
Source: Ipsos Analysis, based on ‘Socio-economic mobility in Malaysia’ report, 2016, Khazanah Research Institute

Today’s generation of Malaysians are enjoying better education than their parents. Despite this, the social mobility in education has not translated similarly in equal mobility when it comes to the types of jobs and the level of income. (Based on Khazanah’s Socio-economic Mobility Report in 2016, while 62% of Malaysian children enjoy better education than their parents, only 37% hold better skilled jobs, and only 35% enjoy better income. In fact, 15% of Malaysian children hold worse skilled jobs than their parents, and 39% have worse income.) The poorer social mobility in terms of job skills and income imply that future generation of Malaysian families will likely suffer poorer economic wellbeing.

As an indication, the ‘Family Economy’ domain under the Family Wellbeing Index conducted in 2011 and 2016 was consistently ranked in the bottom-3 poorest scores. (Scores for Family Economy: 2011—6.90; 2016—7.05.)

Mismatch in skills to jobs today affects economic wellbeing of future families

The slower mobility in occupational skill and income is partly caused by the high prevalence of mismatch between the skills required by the job and the educational skills of Malaysians, particularly in the semi-skilled level. (In 2016, 60% of all employed Malaysians held semi-skilled jobs. However, only 44% of all employed Malaysians held semi-skilled education qualifications). The mismatch has resulted in over- and under-employment scenarios, which does not contribute positively to salary growth.

From 2010 to 2016, there was a shortage of about 110,000 semi-skilled Malaysians needed to fill available semi-skilled jobs.

Total supply-demand gap at skilled and semi-skilled levels (thousand people), Malaysia, between 2010 to 2016
Source: Labour Force Survey Report 2010 – 2016
Note: ‘New Employment Created’ is the difference between employment in 2016 and 2010 in the occupation skill group. ‘New Workforce Created’ is the difference between labour force + outside labour force in 2016 and 2010 in the particular skill group. Definitions: For New Employment Created:(1) Skilled=Managers, Professionals, Technicians and Associate Professionals (MASCO Groups 1, 2, & 3); (2) Semi-skilled=Clerical & Support Workers, Service and Sales Workers, Agriculture, Forestry and Fishery Workers, Craft and Trade-related Workers, Plant and Machine Operators and Assemblers (MASCO Groups 4, 5, 6, 7 & 8);
For New Workforce Created: (1) Skilled=Diploma, Degrees and equivalent; (2) Semi-skilled=SPM, STPM, Certificates and equivalent.

Currently, not many Malaysians are convinced that the country has enough quality job opportunities.

Question: In your opinion, to what extent do you agree or disagree with the following statements?
Statement: There are enough QUALITY job opportunities available in Malaysia for those who are qualified (Quality jobs refer to professional, managerial, executive, and technician jobs).
Source: Population survey conducted under this study (2017), Q. D3 Base: All Respondent 3,044

Poorer perception and preference for TVET qualifications fuelling the mismatch gap

Malaysians’ Perception and Preference for TVET Qualifications
Source: (1) Population survey conducted under this study (2017); (2) Ipsos Analysis, based on MPFS-5; (3) Ipsos Analysis, based on Labour Force Survey Report

Malaysians in general have a poorer perception of TVET education qualifications compared to academic education qualifications. (Based on the study’s survey, 55% of all Malaysians believe that TVET qualifications are viewed less favourably compared to academic qualifications.) Based on MPFS-5 survey in 2015, the preference between TVET-academic is about 40% to 60%. The poorer perception and preference for TVET qualifications is a major challenge that needs to be addressed, as the nation has been and will be creating more TVET-related job opportunities compared to academic-related job opportunities.

(From 2010 to 2015, 70% of employment created were in TVET-related; under the 12 NKEA, more than 1.3 million TVET jobs will be created by 2020.)

Qualifications of employed migrants, Malaysia, 2010—2015
Source: ILOSTAT Database; Ipsos Analysis Definitions: Highest level of education completed based on International Standard Classification of Education (ISCED) 2011. (1) Advanced Education = All Tertiary Education and above; (2) Intermediate Education = Post-Secondary Non-Tertiary Education and Upper Secondary Education; (3) Basic Education = Primary and Lower Secondary Education.

In term of education qualifications, more than half of the employed migrants are low-skilled (i.e. having only primary or lower secondary education). There is an ‘overemployment’ of low-skilled qualified migrants, as the number of migrants with low-skilled qualifications outnumber the number of low-skilled jobs. This has an impact to productivity, as low-skilled qualified migrants are absorbed into semi-skilled or skilled jobs. At the same time, there is also an ‘underemployment’ of skilled migrants, as the number of skilled qualified migrants outnumber the number of skilled jobs.

Reliance on low-skilled foreign workers

The high reliance on low-skilled foreign workers have depressed local salaries and wages.

This can be observed in the significantly lower salary growths in the agriculture, construction, and manufacturing industries where about 60% of all foreign workers are being employed, compared to the salary growths in all other industries.

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