Causes of Unemployment

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Causes of Unemployment
In Malaysia, the unemployment rate is considered low compared to the early years such as 1986 where the unemployment rate reached as high as 7.6%. Today the unemployment rate is still affected by many factors and in order to make sure it doesn’t reach as high as before, we need to find out the causes of unemployment so that we can provide a solution to the cause of it. Foreign labor force with lower wage or salary

Redundant workers and fresh graduates with qualifications for their respective job sectors searches for jobs with acceptable wage or salary. This will delay their ability to work period resulting in firms that need labor to be desperate and start demanding for foreign labor force with low wage or salary. Foreign workers from Indonesia, China, Myanmar, Vietnam, Philippines and many other countries enters Malaysia and fill in the vacant jobs in Malaysia causing job sectors to decrease in the number of jobs available for our own labor force causing labor force in Malaysia to increase in the unemployment rate. Below is the table of the total number of foreign workers in Malaysia from 1999-2008 : Total Number of Foreign Workers in Malaysia, 1999-2008

Year| Foreign workers| Percent increase y-o-y|
1999| 409,660| .|
2000| 807,096| 97.02%|
2001| 849,829| 5.29%|
2002| 1,067,529| 25.62%|
2003| 1,336,980| 25.24%|
2004| 1,470,090| 9.96%|
2005| 1,815,238| 23.48%|
2006| 1,829,209| 0.77%|
2007| 2,044,805| 11.79%|
2008| 2,062,596| 0.87%|
Source: Ministry of Home Affairs

Number of foreign workers in Malaysia by Sector, 1999-2008

| 1999| 2000| 2001| 2002| 2003|
Sector| Total| Percentage (%)| Total| Percentage (%)| Total| Percentage (%)| Total| Percentage (%)| Total| Percentage (%)| Maid| 94,192| 23.0| 177,546| 22.0| 194,710| 22.9| 232,282| 22.0| 263,465| 21.2| Manufacturing| 155,277| 37.9| 307,167| 38.1| 312,528| 36.8| 323,299| 30.6| 385,478| 31.1| Plantation| 74,501| 18.2| 200,474| 24.8| 222,886| 26.2| 298,325| 28.2| 350,351| 28.3| Construction| 49,080| 12.0| 68,226| 8.5| 63,342| 7.5| 149,342| 14.1| 252,516| 20.4| Services| 36,610| 8.9| 53,683| 6.7| 56,363| 6.6| 64,281| 6.1| 85,170| 6.9| Agriculture| .| .| .| .| .| .| .| .| .| .|

Total| 409,660| 100.0| 807,096| 100.0| 849,829| 100.0| 1,067,529| 101.0| 1,336,980| 107.8|

| 2004| 2005| 2006| 2007| 2008|
Sector| Total| Percentage (%)| Total| Percentage (%)| Total| Percentage (%)| Total| Percentage (%)| Total| Percentage (%)| Maid| 285,441| 19.4| 320,171| 17.6| 310,662| 16.6| 314,295| 15.4| 293,359| 14.2| Manufacturing| 475,942| 32.4| 581,379| 32.0| 646,412| 34.6| 733,372| 35.9| 728,867| 35.3| Plantation| 384,473| 26.2| 472,246| 26.0| 354,124| 18.9| 337,503| 16.5| 333,900| 16.2| Construction| 231,184| 15.7| 281,780| 15.5| 267,809| 14.3| 293,509| 14.4| 306,873| 14.9| Services| 93,050| 6.3| 159,662| 8.8| 166,829| 8.9| 200,428| 9.8| 212,630| 10.3| Agriculture| .| .| .| .| 123,373| 6.6| 165,698| 8.1| 186,967| 9.1| Total| 1,470,090| 100.0| 1,815,238| 100.0| 1,869,209| 100.0| 2,044,805| 100.0| 2,062,596| 100.0| Source: Ministry of Home Affairs

As we analyze through the years in the respective sectors, we find that the highest total by percentage is the manufacturing sector. In the manufacturing sector, labor force power needed is indeed higher compared to other sectors and so for the firms to obtain a total satisfying profit, they need to have a lower cost such as providing low wage or salaries to the foreign workers. Since our labor force have no intend to work in low wages and this had been always causing the Malaysia unemployment rate to increase.

Lack of experience and skill of fresh graduates
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