CHAPTER ONE

1.0 INTRODUCTION

Human capital is a combination of traits which comprises of knowledge, talents,

skills, abilities, experience, intelligence, training, judgment and wisdom. Human capital is an

asset to a nation and gets to be clearly fragile as the absence of human component that can

start new activities in financial exercises. However in order to reach high class human capital

this is not a simple errand and take long period.

Human capital is most crucial part is any organization. This is because an individual

who engaged with an entity or organization tend to spend maximum part of their day in

contributing the entity towards success. Human capital has relatively importance in labor

surplus countries. Besides that, until we develop artificial intelligence the entity or

organization required human capital to accomplish anything in the world today. As the world

move deeper and deeper into knowledge-based economy that depends on information,

knowledge and high-level skills, human capital will become increasingly important. These

resources are important as the total capacity of the people that represent a form of wealth

which enable to accomplish the goals of the nation or state or portion thereof.

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Employment Rate in Malaysia

Unemployment among the graduates turns into an issue, in Malaysia as well as in

whole world. Malaysias unemployment is relatively low and stable at around 3.4 percent in

May 2017 compared with the same month of the previous year. This means the population is

experiencing close to full employment. In fact the country reached its lowest level of

unemployment in year 2014, with a rate of 2.85 percent. Malaysias vibrant economy is

considered one of the strongest in Southeast Asia. Along with years of political stability, it

has been supporting such a low unemployment rate and good growth every year. Industries in

Malaysia have been a strong contributor to Gross Domestic Product (GDP) and currently

provide around 30 percent of employment opportunities. Malaysia is strong and growing

economy, average GDP per capita is growing at increasing rates as well.

However, despite these positive statistics, news reports state that the number of job seekers

and those unemployed, 3 percent are generally young people, both graduates and non-

graduates, who have had trouble entering the job market. Below statistic shows the

unemployment rate in Malaysia from 2010 to 2016 with projections up to 2020. In 2016, the

unemployment rate in Malaysia was at approximately 3.45 percent.

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Skilled, unskilled and semi-skilled labor in Malaysia

Skilled labor refers to labor that required workers who have specialized training or a

learned skill-set to perform the work. These workers can be either blue-collar or white-collar

workers, with varied levels of training or educations. High skilled workers may fall under the

category of professionals such as doctors, lawyers, electricians and computer operators.

Meanwhile unskilled labor does not required workers to have special training or skills.

Examples of remaining unskilled labor generally include farm laborers, general cleaners

grocery clerks. Semi-skilled or mid-skill labor addresses the increase in demand for skills

even for less complex jobs. These jobs require some skills because they are more complex

than those that can be performed by a non-skilled laborer. However, they do not require

highly specialized skills. Examples of semi-skilled jobs are customer service representatives

and typists. Furthermore, these jobs generally require more than a high-school diploma, but

less than a college degree.

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 Malaysia Plan 10 (MP10) and Malaysia Plan (MP11) also focus on improving skilled

human capital efficiency to accelerate economic growth and advanced nation. The 11MP

targets skilled workers, that is, those with diplomas and higher qualifications, to reach 35% or

5.35 million of total workforce by 2020.

As per 2016 only 28% of the total workforce of 14.76 million is considered skilled workers in

Malaysia. A better proportion of skilled workers are needed for boosting the Malaysia

economy to move up the value chain and be globally competitive. According to data from the

Malaysian Productivity Corp, the average annual labor productivity growth between 2011

and 2015 was 1.8% while the 11MP has a target of 3.7% annual growth. The doubling in

labor productivity growth is needed to hit the high-income target of the New Economic

Model. Malaysia suffers from a shortage of skilled workers, weak productivity growth

stemming from a lack of creativity and innovation in the workforce and over-reliance on

unskilled and low-wages migrant workers. Unskilled workers in Malaysia are mostly foreign

works. Unskilled foreign labor is the pest of the Malaysia economy. There are 1.9 million

documented foreign workers in the country with the Government having put a cap of the

proportion of foreign workers to the total labor force at 15%. Unofficial estimates of foreign

workers, both legal and illegal, could be more than double that with the numbers having a

negative effect on total wages.

Jobless Graduates

Every year about 200,000 students graduated from higher learning institutions. As per

statistics from Kementerian Pendidikan Malaysia, 1 out of 4 graduates remain unemployed 6

months after graduation, with the majority being Degree holders. These graduates make up

33.5 percent of those who are unemployed. Besides that statistics shows that, about 43.4

percent of unemployed graduates are from arts and social science background followed by

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24.5 percent of technical background, 20.2 percent of science, 8.1 percent of Information

Communication and Technology (ICT) and 3.9 percent of education background.

The majority unemployed graduates are from public university. Below are the types of

university which projects higher unemployment rate.

Sourced by: Kementerian Pendidikan Malaysia

However, based on Jobstreet survey, about 64 percent employers do not look into wheter

graduates from foreign, private or public universities. Since labor assets is an essential in

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delivering a high level nation, thus this paper expects to identity elements that lead to

unemployment issue among the Malaysian graduates and how to overcome these problems.

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 1.1 THEORETICAL FRAMEWORK

Factors affecting
Unemployment rate among
fresh graduates in Malaysia

Graduates competency
Unemployment of Quality of education
Graduates in Malaysia Communication skills
Choosing work attitude
Lack of Industrial training
Job Mismatch
English Proficiency

Figure 1: Factors influences the rate of unemployment of graduates in Malaysia 2016

Based on the figure 1, these are the factors affecting unemployment rate in Malaysia.

Nasrudin (2004) discovered that there were six factors that influenced the rate of

unemployment of fresh graduates in Malaysia 2016. These factors are mainly due to rapid

increase of graduated workforce, lack of training for work preparation, rapid increases of

the population rate and rapid decrease of the mortality rate, educational development,

economic recession, and capability of graduates. Nasruddin (2004) also highlights that

graduates competency are the quality or skills that need to gained by the graduates and

need to be developed by the graduates when they are at the higher educational institutions.

This focuses on two types of skill, which are technical and employability skills. A technical

skill is an important element that should be mastered by graduates as it is the core for

graduates to gain job. Meanwhile employability skills refer to quality and personal

intuition which graduates should have. These qualities will help marketability of he

graduates and help the graduates to become a competence and competitive.

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1.2 FACTOR AFFECTING THE UNEMPLOYMENT OF FRESH GRADUATES IN

MALAYSIA

1.2.1 Rapid increase of graduate workforce

Technology advances makes many students easier to enroll into university and pursue

their higher education especially in a private university. Therefore, the number of graduates

produced increases year by every year and provides a large force of graduate workforce in

market. Thus this situation creates less availability of the job in the market. The Sun

Newspaper (Dec 2016) highlights that Malaysia skilled workforce increased to 31% by Dec

2016, the human resources minister has described it as a "very encouraging development" as

the country's target was to have 35% by 2020.

1.2.2 Lack of training for work preparation

An understudy's accomplishment is being judged by their examination result,

evaluations and CGPA which is all examination bases and ignored the importance of adapting

working world. This makes graduate that is being created is absence of preparing for work

planning and causes the unemployment rate increments. Most of the university in Malaysia

mainly public university or colleges prepares the students with internship or practical

program within 8-24 weeks. The objective of this program is to provide preliminary exposure

to these students on the real condition and firsthand experience at the work place.

Additionally such program will enhance the advance networking in hope that students will be

offered job opportunity. Aminah (2014) stated that the improving the curriculum by including

skills for the graduates, create links with the industry so that the industry can provide job

opportunities. Nora (2014) also emphasizes that every developed curriculum should meet the

requirement and in line with the needs of the industry which needs to based work-based

learning. Some of the internship program offered by universities is not matched with the real

working world. Ramakrishnan (2015) shared that in Malaysia about 60.14 percent students
and 88.71 percent graduated feel that lack of exposure which drastically leads to

unemployment.

1.2.3 Rapid increase of the population rate and rapid decrease of the mortality rate

Malaysia population in year 2017 is 31,178,873 based on World Population review.

Malaysia currently has one of the lowest mortality rates among developing countries, a rate

that compares favorably with those of developed countries. Life expectancy in Malaysia

showed a dramatic increase in the years from 1960 to 2011 as it grew from an average of

59.42 years to 74.26 years respectively. In 2016, the life expectancy is 74.1. The increases of

the population rate and decreases of mortality rate decreases cause graduates to be jobless.

This because there is inadequate job vacancy is offered daily in the country. Besides if those

that are working till old definitely the new generation will never get opportunity of applying

that particular job or getting job is a short period. Employers nowadays prefer employees

with experience of years.

This requirement actually reduces the chances of a graduate to apply a job at the

moment. Indeed increases of population rate leads to population of graduates increases.

Therefore there are ample amount of graduates forces are available in market but the job

vacant is very less.

1.2.4 Educational development

 Educational development in Malaysia is also one factor that affects the rate of

unemployment of fresh graduates in Malaysia. The main element of unemployment problem

among graduates is the failure of higher education institute to ensure the syllabus or

th
curriculum is consistent with the job market requirement (Utusan Malaysia, 18 May 2005).

This causes problems among the graduates to obtain job that match their skills and

qualification. In general they are incapable to gadget what they studied in institute into real

life working field. Thus companies not favored to hire graduates from university. Employers

have added the requirement where employees need to have few years of working experience.

1.2.5 Economic recession

World and Malaysia economy from 2014 till today is one of factor graduates are being

unemployed these days. The manufacturing sector has been the strongest sector in the country

but now been replaced with service sector due to technology development. The services

sector requires people with right technical knowledge and also possesses the right soft skills

interpersonal, communication, wisdom, maturity and is business oriented. However in this

era, manpower is being replaced with computers and so on. This causes unemployment rate

of graduates increases. A recession happens when there are two or more consecutive quarters

of negative gross domestic product (GDP) growth. This means economic growth is slower

during these periods which lead to fall in sales, stock prices incomes and maybe bankruptcy

also. Thus the rate of unemployment of graduates increases these periods.

1.2.6 Capability of graduates

The capability of graduates is being questioned seriously nowadays. Concentrating in

excelling in education part makes graduates failed to improve their soft skills qualities such

as technical skills, problem-solving skills and communication skills, especially in English

language and also in the aspect of management, problem-solving, communication, leadership,

creativity, critical thinking, proactive, self-confidence and interaction skills which is

important in working life. This causes employers rejecting graduate in working places. They

prefer someone with experience as they are well known with working environment.

Graduates hardly to cope with new working environment as in real working world the

implementation is slightly differ. Lacking of experience and confidence during attending

interviews also leads to unemployment factor of fresh graduates in Malaysia . Graduate

Employability in Asia, a report published in 2013 by UNESCOs Asia and Pacific Regional

Bureau for Education in Bangkok stated that as a country moving up the value chain labor

productivity is dually increasingly the driven of high-level thinking and behavioral skills.

These skills were gap in Asia country in fact in reality it is getting worst. The report also

highlighted that graduates should emphasize not only in pursing the demand to economic but

also into civil society and social development.

1.2.7 English Proficiency and Communication Skills

National Higher Education Research Institute (IPPTN), February 2003, revealed that

Malaysian graduates are fragile in command of English language. They are facing difficulty

to communicate which leads to low interpersonal relationship (Wei, 2011). In addition,

according to Job Streets recent survey, shows the main problems faced by employers in

hiring graduates were poor command of English language of 56% (Ministry of Higher

Education Malaysia, 2012).

1.2.8 Choosing Work Attitude and Job Mismatch

IPPTN also revealed that Malaysia graduates are passive and have no creativity and

less independent to complete their job, with some graduates have attitudes problem, too

choosy in jobs, unable to work as a team, not willing to learn, selfish and demand for high

salary (Wei, 2011). The survey shows the main issue faced by employers in Malaysia in

hiring graduates were poor character, attitude or personality with 37%, demanding of salary

with 33%, irrelevant Degree or job mismatch with 30%, graduates too choosy selecting jobs

and company with 27% and no suitable job opportunities with 16% (Ministry of Higher

EducationMalaysia,2012).
1.3 Problem Statement

Unemployment issue in Malaysia

The rising unemployment rate among the graduates in Malaysia is an upsetting trend.

For many years, the problem cropping and even the news hit the parliament. Higher education

is become no longer a symbol of future career success. In July 2006, The Sun newspaper

reported that the unemployment rate of public universities has reached a staggering 70%,

whereas the private institutions recorded 26% and foreign graduates 34%. Hansad (2005)

rationalized the reasons of unemployment is because of lack of soft skills such as skills, lack

of self-confidence, low self-esteem, poor in English and computer skills. Bank Negara 2015

report stated that jobless youth rose out of 10.7 percent youth unemployment rate with 23

percent are those university and this issue should immediately addressed.

Rahmah et al. (2011), stated that quality of graduates themselves is the main reason

for unemployment problem among in Malaysian. The employers in the labor industry have

given negative comments on the employment of graduates and mentioned that these

graduates do not have the suitable skills and qualifications, which meet the needs of the

industry. Furthermore, the graduates are poor in the aspect of employability skills and not

showing a good working performance. Central Bank of Malaysia,2002 has found that the

Malaysian graduates are less skilled as compared to the international graduates from

overseas. These skills include technical skills, problem-solving skills and communication

skills, especially in English language. Ten key weaknesses of Malaysian graduates are in the

aspect of management, problem-solving, communication, leadership, creativity, critical

thinking, proactive, self-confidence and interaction skills (Ranjit, 2009). These features lead

to the difficulties for the graduates in obtaining jobs, which meet their educational

qualifications as well as their soft skill qualification. There are also job industries reporting

that the reason for job vacancies in a working field is because of lack of experience and

qualified graduates. National Associated of Manufactured (NAM), revealed that there are
gaps exists in the range of skillfulness in almost all of the working fields (Kahirol et al.,

2008).

This matter is regretted because inability for the Malaysian graduates to fulfil job

vacancies in Malaysia resulting in the hiring of foreign workers. Currently, a good academic

achievement is no longer a guarantee for the Malaysian graduates to get a job (Noor Azina,

2011). It is a benefit for the graduates but it is not a guarantee for them to be given jobs.

Since there is a big gap between the quality levels of the Malaysian graduates with the

international standard, this needs to be handled in order to ensure the human capital of

Malaysia rectify with skilled, versatile and marketable graduates (10th Malaysian Plan,

2010). Becker (1964) it is stated that human capital that has a high knowledge and skills

contribute to the increase of the countrys economic productivity. Becker (1964) also stated

that a high investment in producing useful human capitals is important as long as it give high

and positive impacts to the economic productivity. Therefore this study is conducted to

identity causes the rate of unemployment among graduates in Malaysia so that this problem

can be manage by 2020.

1.4 Objectives of the studies

There are general objective and specific objectives. The general objective and specific

objective will be identified in the following.

1.4.1 General Objective

The general objective of this research is to study the factors that influence the rate of

unemployment of graduates in Malaysia 2016.

1.4.2 Specific Objective

The specific objective for this study as per below:

To identity factors that contribute to the unemployment rate among graduates in

Malaysia

To determine on peoples perception level and awareness on the unemployment issues

in Malaysia

To suggest some policy enhancement in reducing or catering the problem

1.5 Significant of the Study

The significant of the study is to overcome the increase in rate of unemployment of

graduates in Malaysia year by year. This research also gives a benefit to graduates to find the

factor of unemployment and create awareness among themselves particular field during job

search. Thus this will increase the productivity and growth of the country.

1.6 Scope and Location of Study

The scope of this study is segmented to the graduates in Malaysia. To be specified we

will only take count of graduates from any universities from year 2013 to 2017. Location will

be in around Klang Valley as currently we are limited with resources, time and cost. So Klang

Valley will be the perfect location of study as it is the city center where graduates from all

over Malaysia seeks job.

1.7 Limitation of Study

There were some limitations with respect to the analysis and data that may affect the

accuracy of the results.

A small sample size has a greater probability that the observation just happened to be

particularly good or particularly bad. Therefore it is firmer to find significant relationships

from the data, as statistical tests normally require a larger sample size to justify that the effect

did not just happened by chance alone.

Questionnaires or E-questionnaires that fill by respondents would be based on bias.

Direct interview would be more accuracy that questionnaire. Furthermore, it would have

some difficulties to approach the respondents because they felt weird upon strangers and give

cooperation to the unknown people.

Moreover, it would be difficult to get back the entire questionnaire as the respondent

may not realize the importance of the research and did not wanted to waste time by fill the

questionnaire.

Finally, cost and time became a heavily limitation to complete this study. Taking a

good respondents sample would have been indeed a costly and time-consuming activity. If

cost and time were allowed to be increase, greater volume of respondents participate in this

study and thus the validity of the result would also increase.
 CHAPTER 2

2.0 Introduction

Here few topics on based on this study been reviewed from past research studies. This

includes perception of other researchers and the publics opinion relating to factors affecting

the rate of unemployment of fresh graduates in Malaysia. Thus eight articles reviewed as to

support the factors that been identified in this research paper as the factor of unemployment

rate in Malaysia. These eight articles Zaliza Hanapia, Mohd Safarin Nordinb, and Ridzwan

Che Rusc (2014) ; Che Mohd Zulkifli Che Omar and Shanmuganathan Rajoo (2016)

;Mohamad Idham Md Rzak, Asliza Mohd Yusof, Wan Nor Syazana, Wan Effa Jaafar, and Adi

Hakim Tali (2014); Dr. Noor Azina Ismail (2011); and Rahmah Ismail, Ishak Yussof and Lai

Wei Sieng (2011); Nor Aini Yusof, Siti Nur Fazillah,Nazirah Zainul and Hanizam Awang

(2013); Gurvinder Kaur and Sharan Kaur (2008); Gopala Krishnan Sekharan Nair ,Rozlan

Abdul Rahim and Roszainora Setia (2012).This chapter will discuss about what each research

paper is talking about the factor that affects the rate of unemployment of graduates in

Malaysia and will be used in this research paper.

2.1 Unemployment Problem in Malaysia

About 3.5 percent increases of unemployment rate in Malaysia in September 2016

from 3.3 percent a year earlier. The figure rose by 4.5 percent or 22.3 thousand to 512.6

thousand people. Employment increases by only 0.7 percent or 97.9 thousand to 14,249.6

thousand. The labour force increased 0.8 percent or by 120.2 thousand to 14,762.2 thousand.

Unemployment rate in Malaysia is an averaged of 3.27 percent from 1998 until 2016,

reaching as high of 4.50 percent in March of 1999 and a record low of 2.70 percent in August

of 2012;Source of Department Statistics Malaysia (2016). From this we able to identified that

graduates need to catch up as employers are not too satisfy about their quality levels. A

significant 70% of respondents said that the standards of graduates were just average, while

24% believed that they were bad and only 6 % said they were good ; JobStreet (2015).

2.2 Unemployment Problem among Graduates in Malaysia

According to Zaliza, Mohd Safarin, and Ridzwan (2014), graduates competency and

quality of education are the important factors in increasing of unemployment rate of

graduates in Malaysia. They stated that the rate of unemployment is related to the learning

and curriculums of the programmers offered in educational institutions. Therefore the author

has considered that unemployment as macroeconomic issue. Unemployment issues among

graduates are still unresolved over the years where 65,500 graduates were recorded unwaged

which are 16.7% of total labor force in 2010 based on Department of Statistics.

2.2.1 Graduates Competency

Competency consists of five characteristics which are skills, knowledge, self-esteem,

motivation and attitudes in doing a task. Hillage & Pollard, 1998 analyzed that skill is an

ability to accomplish a specific task while employability is about having the capability to gain

initial and maintain employment. Technical skills need to be mastered by the graduates in

order to be employed in the industry. Employability skills such as non-technical skills, soft
skills, generic skills, key skills and core skills are required for fresh graduates in order to be

employed once completed their higher education. Based on employers perception, graduates

that being selected are based employability skills such as creativity, innovative, problem

solving, cooperation, information management and entrepreneurship in order to be hired. This

is very important as hired employees should have the employability or job readiness skills

that help them fit into and remain in the work environment is a real problem. Employers need

reliable and responsible workers who can solve problems, social skills and attitudes to work

together with colleagues and able to provide betterment for a company or business.

Syed Hussain, 2008 mentioned that most graduates have no issues in term of technical

skills but contradict to performance in non-technical job scope. The author also revealed that

62.3% of the technical graduates are unemployed due to lack of employability skills

compared to technical skills. Employability and technical skills are indeed essential criteria

among graduates of higher education to enable them to be accessible a job once graduated.

Indeed interpersonal skills were very vital to build relationships, ensure the sharing of new

ideas and best practices, and benefit to companies throughout services.

2.2.2 Quality of Education

Quality of education hard to be measured and it is also one of the factors leading to

unemployment rate in Malaysia.The quality of education is depending on the quality of

teaching and learning process, educational facilities and infrastructures, well-planned

curriculum and an effective implementation of the curriculum. Thete, 2003, stated that higher

education is considered a key to graduates career development. Nowadays public and private

educational institutions in Malaysia been increasing tremendously and resulted to a

competition among the educational institution. This leads to increase of unemployed

graduates. Hoy and Miskel (2005), a good higher education institution consist of leadership,

classroom climate, quality of curriculum, structured teaching, effective learning time,

achievement-oriented and recognition of success of the student in it. Ministry of Education

(2010) has standards in Malaysian education system such as the leadership and direction,

organizational management, curriculum, co-curricular and sports, student affairs, teaching

and learning process and student excellence. Harvey, 1993 identified that key factors

affecting educational quality are the quality of teaching, the content of the program and the

evaluation by the trainers.

Tang (2002) said that teaching effectiveness is one of the ways to measure the

quality of teaching and learning. Deputy Human Resources Minister Datuk Abdul Rahman

Bakar has stated that the main contributor of unemployment among graduates is due to failure

to match educational syllabus or curriculum with the job market requirement (Utusan

Malaysia, May 18 2005). Curriculum and subjects thought in university nowadays are not in

line with real workplaces requirement. Thus this affects the employment of graduates as their

competency of being employee is being questioned in the industry due to the quality of

education.

2.2.3 Communication skills

Carol, 2011 mentioned that Malaysia acknowledges the high importance of English

Languages among graduates. Carol also has mentioned that although the English laguages

been fully emphasized in Malaysia but yet graduates still find it difficult to converse in

English during job interview which causes the employer to be doubtful in hiring graduates.

Employers believe that graduates that are fluent in English are high skilled and more effective

in improve the productivity of the company. Wei, 2011 study was conducted where 50

companies in the state of Selangor and Perak prefers employees that are fluent in English

during recruitment of job. Therefore, graduates have to give priority for English proficiency

and communication skills in order to get hired in the industry.

2.2.4 Choosing work

Dato Sri Rischard Riot Anak Jaem, Human Resources Minister, stated that graduates

nowadays are being too choosy or selective in applying job. These graduates tend to look for

suitable jobs with promising salary which is proportionate with their academic qualification

they commanded. Besides that, they also would not try on jobs that not in line with their

qualification. This cause the rate of unemployment increases over the years.

2.2.5 Experience

Rao, 1996 believed that graduates today are needed to complement with their

education with real working world experiences. Malaysia Today, 2005 discovered that about

60,000 graduates are lacking of experience in real working environment. This is mainly due

to lack of experiences. Private sectors always prioritize candidates that have working

experience compared to highly qualified graduates. This attitude of employers leads to

unemployment of graduates mainly those that freshly graduated from higher education

institution. The new graduates are not given an opportunity to prove their knowledge and

skills as many employers does not want incur any loss due to hiring graduates that are lack of

experience in working sector

Experience is important because employers do not need to use their resources to

facilitate fresh graduates on training as the action leads to cost reduction is a company.

However by this action also leads loss to the country because unemployment rate has

increased and the amount of income per capita decreases.

2.2.6 Lack of Industrial Training

Wei, 2011, mentioned that lacking of industrial training is one of the factors that affect

the rate of unemployment of graduates. Ministry of Education, 1994, explained that industry

training enable graduates to experience working conditions and to expose to them realities.
The lack of industrial training which is in period only from 3 -6 months provided by

education institutions in collaboration with companies and non-governmental organization

does not really help these graduates to face the real challenges in the working industry. The

real working life exposure and prospects does not obtained by the graduates, thus these

graduates not capable of getting jobs. This leads to unemployment rate to increase. Nor Aini

Yusof, Siti Nur Fazillah ,Nazirah Zainul and Hanizam Awang (2013), discover that employers

preferred most graduates to undergo industrial training as the training

exposes the student with real working environment; industrial training

exposes the student to practical issues rather than theory; students are

able to gain experience from the technical training; and industrial training

benefits the trainee, company and community.

2.2.7 Job Mismatch

Berlingieri & Erdsiek, 2012, stated that job mismatch occurs at the level of formal

education of a worker possesses deviates from the job requirement and skill mismatch occurs

when the employer possesses higher or lower level of skills than required to perform the

particular job. Shujaat Farooq, 2011, highlighted that the phenomenon of job mismatched can

be divided into 3 categories. These are job mismatch compared to graduates education level,

job mismatch compared to graduates qualification, and job mismatch compared to graduates

field of study. In this paper, job mismatch as a factor that influences unemployment among

graduates in Malaysia.

2.2.8 English Proficiency

Md Yassin, 2010 and Sharif, 2005 mentioned this factor also contributes to

unemployment among graduates is the lack of English language proficiency. Based on

survey, most of graduates and employees are lack in English language skills. English
language proficiency and communication skills are very vital for graduates to be employed.

According to the Association for Academic Language and Leaning (AALL) (2009), English

language proficiency is defined as the students capability in using English language to

communicate by vocally or in written context by using correct grammar and sentences

structure. Government has set requirement and exams such MUET test for students before

pursue their higher education to eventually increase their awareness of the importance of

knowing English language proficiency.

Gurvinder Kaur and Sharan Kaur (2008) discovered graduates are not widely

marketable in the job market due to a lack of English proficiency and this is costing the

nation a great deal of money. Money save on retraining programs can be utilized elsewhere

like upgrading libraries around the country. Graduates with good English proficiency are vital

manpower in the nations quest to create a K-economy where the knowledge of the populace

would be a pulling factor in attracting foreign direct investment.

2.3 Conclusion

This study proves that having good scores did not assurance employment for

Malaysian graduates. Effective skills training will enhance and produce graduates who are

educated and skilful before entering the working field. Moreover, it will also produce

graduates with a good working ethics, proactive and problem-solver in handling any work

related. Pang (2011) mentioned that there are three primary strategies to construct an

integrated human workforce, which is by; restructuring the educational system in order to

increase the students achievement, increasing the graduates skills in order to increase

Malaysia is aiming to become a fully developed nation by the year 2020. Morever, English

language is relatively vital for cross cultural communication involving international

participation. Less communication skills, soft skills and experience working and rather

choose employment to issues of unemployment among graduates in Malaysia. Although

unemployment is not as severe as its looks, The Star (2013, 23 October) reported that as

Malaysia is said will achieve full employment as the unemployment rate is below 4 %. Future

graduates should take deep and serious on this issue as the number of unemployed graduates

is moderately increased through the year. Future graduates also should take the opportunity of

internship program as a training ground to improve their employability skills and try to make

the best out of it (Yusof, Mohd Fauzi, Abidin, Awang, 2013).

 CHAPTER 3

RESEARCH METHODOLOGY

3.0 Introduction

This part is discusses the method had used in this study. The scopes of the discussion

include research design, research methods, data sample and collection and data analysis.

3.1 Research design

This study conducts a descriptive research to examine the issues that affecting

unemployment rate among graduates in Malaysia. In this study, independent variables are

graduates competency, quality of education, communication skills, choosing work attitude, lack of

industrial training, job mismatch, and English proficiency. The dependent variable is

unemployment rate.

In this study, a survey is conduct to gather primary data. A survey is a data gathering

method that is utilized to collect, analyse and interpret the views of a group of people from a

target populations (Mae Sincero, 2015). Some questionnaires are structured checklists and have

pros and cons.

The E-questionnaires are a quick and efficient way to obtain information from a large

number of respondents. It is less of costly then interview hundreds of respondent. The whole

questionnaire consists of close ended question study and involves only single cross-sectional

questionnaire for the information obtained. Electronic (E)- questionnaires survey was a versatile

method because it is compatible to all respondents. Besides, the face-to-face technique is

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conducted when distributing questionnaires because it is easy for researcher to explain the purpose

of the questionnaire to respondents and can collect back the questionnaires on the spot.

Graduates competency
Quality of education Independent
Communication skills
Choosing work attitude
variable
Lack of industrial training
Job mismatch
English proficiency

(Figure 1: Research Model)

3.1.1 Sampling Design

Sampling is the primary stage of selecting an adequate number of elements from the

population. Besides that, sampling is also concerned with the selection of a subset of individuals

from within a statistical population to estimate characteristics of the whole population. The

research study focuses on factor affecting unemployment rate among graduates in Malaysia. The

population or population of interest is the total group of people from whom we need to obtain

information (McDaniel & Gates, 1995). Sampling has done because it is impossible to test every

individual in the population research. Besides that, sampling also can reduce time, money and

effort when conducting the research.

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 The sample of research mainly focused the respondents in Klang Valley area. The

respondents include many types ethic like Malay, Chinese, Indian, and other types. The research

focused respondents from Klang Valley area due to limited time frame to complete this research

proposal. Klang Valley is also suitable focus area for this research because many industrial and

work places located in that area. In this study; the targeted respondents are focus on employed

graduates and non-employed graduates. Through this survey, we will know the factor that will

affect unemployment rate in Malaysia. The E- questionnaire will be distributed randomly to

graduates whom employed from any private or public universities or institutions to identify

graduate whom still unemployed or took long waiting period before been employed.

3.2 Research sample

Probability sampling techniques are primarily used in quantitatively oriented studies and

involve selecting a relatively large number of units from a population, or from speci- fic

subgroups (strata) of a population, in a random manner where the probability of inclusion for

every member of the population is determinable (Tashakkori & Teddlie, 2003a, p. 713).

Probability samples aim to achieve representativeness, which is the degree to which the sample

accurately represents the entire population.

The sample for the research would be including the respondents from public sector and

private sectors. The targeted respondents for this study are focused on graduates whom employed

and unemployed. They will be a good representation in this study since they are more positively

correlated to be employed or unemployed after completed studies. Thus, the respondents are

selective. The basic assumption of most survey research is that, by carefully following certain

scientific procedures, one can make inferences about a large group of elements by studying a

relatively small number selected from the larger group (Connaway & Powell, 2010).

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 According to Alreck and Settle (1985), for populations of 10,000 and more, most

researchers would probably consider a sample size between 200 and 1,000 respondents.

Therefore, in terms of time and cost considerations, a convenience sample of 200 individual

consumers who had been using hand phone before are approached to collect data.

3.3 Data collection method

To conduct the study, primary data and secondary data are used by the researcher to

analyse factor affecting the unemployment rate in Malaysia. Primary data was collected by using

self-administered questionnaires which were distributed to respondents through phone and who

were briefed on the purpose of the study. The questionnaires can be consisting of open-ended

questions and closed-ended questions. However, the closed-ended questionnaires choose in this

study because open-ended questions were more difficult to code and analyse. The structure of the

questionnaire is clear, easy to understand, and straightforward to ensure that the respondents could

understand and answer the questions easily.

The 200 sets of questionnaires are distributed or emailed to friends whom been employed

and yet to be employed after completing higher studies. The questionnaires are distributed to

respondents through online by own. Researcher delivers all self-administered questionnaire to

respondents by online at the same time will be receive feedback through online survey.

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 3.3.1 Primary Data

Primary data is information that collected specifically for the purpose of research paper. In

the research, the data would analyses by the descriptive for the data that quantitative such as the

demographic part.

Besides, this research would explore the factors affecting unemployment rate among fresh

graduates in Malaysia. These factors are constituted graduates competency, quality of education,

communication skills, choosing work attitude, lack of industrial training, job mismatch and

English proficiency. Moreover, to achieve the objective of the research, researcher would try to

identify the main factor by using the mean of each factor. The data would analyses thoroughly to

make sure it can achieve the objective of the research.

3.4 Instrument development

Electronic Questionnaires (E-Questionnaires)

The E-questionnaires will the basic in the research as in evaluating the features that

affecting unemployment rate among graduates in Malaysia. The E-questionnaire will be divided

into three sections which consists general information about respondent, graduates who are

working and graduates who are not working yet. The closed question would be the demographic

profile of the respondent while the open question would be using the 5-point Likert Scale

question.

Multiple-choice questions and Likert scale is using in the structure of E-questions. Choice

of questions will be provided with relevant choice of answers and respondents will be asked to

select one or more of the alternative given. The summated rating scale, more commonly known as

Likert Scale, is the easiest to construct. This scale is based upon the assumption that each

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statement/item on the scale has equal attitudinal value, importance or weight in term of

reflecting on attitude towards the issue in question (Kumar, 2005). Each element will be tested on

5 point scales in which 1=strongly disagree, 5=strongly agree. The respondents require indicating

a degree of agreement or disagreement with each of a series of statements related to the stimulus

objects. In this study, there are several statistical techniques that can be used to

analyses collected data such as frequency analysis, reliability test, descriptive statistics,

correlation test and regression. For data analysis, all data collected from respondent were analyzed

using Statistical Package (SPSS).

3.4.1 Factor Analysis

Factor analysis is a statistical method used to describe variability among observed,

correlated variables in terms of a potentially lower number of unobserved variables called factors

(Wikipedia). In this study, confirmationary factor analysis (CFA) was adopted. Cattell, R. B.

(1952) explained that CFA is a more complex approach that tests the hypothesis that the items are

associated with specific factors. CFA uses structural equation modeling to test a measurement

model whereby loading on the factors allows for evaluation of relationships between observed

variables and unobserved variables. Structural equation modeling approaches can accommodate

measurement error, and are less restrictive than least-squares estimation. Hypothesized models are

tested against actual data, and the analysis would demonstrate loadings of observed variables on

the latent variables (factors), as well as the correlation between the latent variables (Child, D.

2006).

3.4.2 Reliability

Reliability in statistics and psychometrics is the overall consistency of a measure. A

measure is said to have a high reliability if it produces similar results under consistent conditions.

It is the characteristic of a set of test scores that relates to the amount of random error from the

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measurement process that might be embedded in the scores. Scores that are highly reliable are

accurate, reproducible, and consistent from one testing occasion to another. That is, if the testing

process were repeated with a group of test takers, essentially the same results would be obtained.

Various kinds of reliability coefficients, with values ranging between 0.00 (much error) and 1.00

(no error), are usually used to indicate the amount of error in the scores (William M.K.

Trochim,2012). Types of reliability are:

Inter-Rater or Inter-Observer Reliability

Used to assess the degree to which different raters or observers give consistent estimates of

the same phenomenon

Test-Retest Reliability

Used to assess the consistency of a measure from one time to another

Parallel-Forms Reliability

Used to assess the consistency of the results of two tests constructed in the same way from

the same content domain

Internal Consistency Reliability or Cronbach Consistency Reliability

Used to assess the consistency of results across items within a test

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 In this research, Cronbach Consistency Reliability test was adopted. Interpretation of

Cronbachs Alpha as per below:

Cronbachs Alpha Internal Consistency

0.9 Excellent
0.9 > 0.8 Good
0.8 > 0.7 Acceptable
0.7> 0.6 Questionable
0.6> 0.5 Poor
0.5> Unacceptable

Source by Peters, G.-J. Y (2014)

3.4.3 Inferential Statistic

Inferential statistics studies a statistical sample, and from this analysis is able to say

something about the population from which the sample came (Moore et al. 2015). This study had

been used ANOVA t-test, F-test, and R-square which were described below:

ANOVA T-Test

The t-test and analysis of variance (ANOVA) compare group mean of variable and these

groups should be substantively interpretable. The t-test was limitedly used to determined means of

two groups while ANOVA was used to determine means for more than two groups. The t-test

considered has a special relationship with one-way ANOVA. These analyses do not, however,

necessarily imply any causality (Park, 2003).

In SPSS, ANOVA test produces an F-statistic that been used to calculate the p-value. If p-

value is less than 0.05, the null hypothesis is rejected. It can be concluded that the average of the

dependent variables is not the same for all groups. In determining which groups are different,

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postdoc t-test has been performed to adjust for an inflated probability of a Type I error

(Creech,n.d).

F-test

F-test is used for testing a joint null hypothesis. F- Statistic is used when deciding to

support or reject the null hypothesis. In SPSS, F-test result will give both an F value and F critical

value, which also referred to the F statistic. If F statistic in a test is smaller than F value, the null

hypothesis is rejected. This showed that only some independent variables have joint hypothesis

effect on the dependent variables (hill, Griffiths & Lim,2010).

R-square

R-square widely uses for the standard linear regression model the familiar coefficient of

determination. R-square measures whose usefulness and limitations are more or less known to the

applied researchers, The higher the R-square value, the netter the model is (Cameron and

Windmeijer,1995)

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Direct and indirect causal relationship

Factors affecting Unemployment

rate among
graduates in
Malaysia

Graduates competency
Quality of education
Communication skills
Choosing work attitude
Lack of industrial training
Job mismatch
English proficiency

(Figure 2: Direct and indirect causal relationship)

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3.5 Hypothesis

This study is aimed to identify the factor affecting unemployment rate among graduates in

Malaysia. Multiple-choice questions and Likert scale used as questions for this research. The

researchers provide a choice of answers and respondents are asked to select one or more of the

alternative given. Then, the Likert scale is a measurement scale with five response categories

ranging from strongly disagree to strongly agree which requires the respondents to indicate a

degree of agreement or disagreement with each of a series of statements related to the stimulus

objects. There are several statistical techniques that can be used to analyses collected data such as

frequency analysis, reliability test, descriptive statistics, correlation test and regression.

This chapter focuses on the research methodology which is the exploratory, descriptive

and causal research design. It is also included the information of the sampling technique and data

collection method as well as the data analysis that has been use in this study.

Therefore, construct our hypothesis which read as follows:-

Remarks : represents of list factor affecting ( graduates competency , quality of education,

communication skills, choosing work attitude, lack of industrial training, job mismatch and

English proficiency) of unemployment rate among fresh graduates

H0: There is no significant impact of to unemployment rate among graduates

H1: There is significant impact of graduates competency to unemployment rate among

graduates

H2: There is significant impact of quality of education to unemployment rate among

graduates

H3: There is significant impact of communication skills to unemployment rate among

graduates

H4: There is significant impact of choosing work attitude to unemployment rate among

graduates

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 H5: There is significant impact of lack of industrial training to unemployment rate among

graduates

H6: There is significant impact of English proficiency to unemployment rate among

graduates

H7: There is significant impact of Job mismatch to unemployment rate among graduates

3.6 Practical and ethical Issue

In this research, researcher had learned the criteria in writing research proposal. In

research proposal, it is including introduction, problem statement, objective, research method,

significance of study and so on. Researchers also work as team and responsible to own

responsibility to accomplish this research. Before develop the questionnaire, researchers will

brainstorming to get the input to develop the questionnaire. Researchers will update their work

progress and make sure all the work go smoothly according to their schedule. Besides, researchers

need to come out with questionnaire and give to respondents for their research.

Besides, in composing research report, analysts are getting the data from a large portion of

auxiliary information that get from many wellsprings of diary. Specialists are carrying on genuine

and dependably think deliberately when build up the poll. At the point when scientists are

dispersing the survey to respondents, analysts will converse with them cordially, clarify plainly

about their motivation on research to respondents and regard on respondents' right side. For

instance, if the respondent doesnt willing to fill the poll, the analyst won't constrain the

respondent to do as such. Specialists additionally ought to act morally analysts can't help the

respondents to top off the poll. All the data inside the poll is secretly. Analysts are communicating

their appreciation towards the respondents for their co-operation.

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 CHAPTER 4

FINDINGS

1.0 Introduction

This chapter will briefly discuss about the research findings and interpretation of data for

this study. The data were analysed using comfirmationary analysis.

1.1 Demographic Profiles

4.1.1. Age

Figure 1: Gender

Gender Frequency Percentage

Male 97 52.0

Female 103 49.0

Total 200 100.0

Table 1: Gender

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 Figure 1 show that, Gender that is involved in this study is male and female. Among the

200 respondents of this research majority are female which is 103 (52%) compared to male which

is 97 (49%).

4.1.2 Age

Figure 2: Age

Age Frequency Percentage

21-24 56 28.0

25-29 82 41.0

30-32 62 31.0
Total 100 100.0

FFigure 2 shows the range of age of the graduates that been involved in this study.

Majority of graduates are from the age group of 21 24 which is 28%, followed by the age group

of 25 29 which is 41%, and group of 30-32 is 31%.

4.1.3 Employment Status

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 Figure 3: Employment Status

Employment Status Frequency Percentage

Employed 181 90.0%

Unemployed 19 10.0%

Total 100 100.0

Table 3: Marital status

Figures 3 show the type of employment status among graduates that been involved in

this study. 181 of respondent are employed which is 90% compared and 19 of

respondents are still unemployed which is 10%.

4.1.4 Graduates Qualification

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Figure 4: Graduates Qualification

Graduates Qualification Frequency Percentage

Diploma/Certification 50 25.0
Bachelor/Degree 120 60.0
Master/PHD 30 15.0

Total 100 100.0

Table 4: Graduates Qualification

Figure 4 shows that majority of the graduates have qualification of bachelor or degree

which is 60%. Diploma or certification is the second highest with 25% and minority qualification

own by graduates is Master or PHD which is 15%.

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4.1.5 MUET Bands

Figure 5: MUET Bands

MUET Bands Frequency Percentage

Below Band 2 50 25.0
Band 3 80 40.0
Band 4 40 20.0
Band 5 30 15.0
Total 200 100.0

Table 5: MUET Bands

Figure 5 shows majority of graduates obtained Band 3 for MUET exam with the frequency

of 40%, the second majority would be band below 2 with frequency of 25%, band 4 are 20% and

the minority graduates obtained Band 5 in MUET with frequency of 15%.

4.1.6 Expected Salary

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Figure 6: Expected Salary by Graduates (RM)

Expected Salary (RM) Frequency Percentage

No expectation 47 24.0
2000-2999 50 25.0
3000-3999 96 48.0
4000-4999 7 4.0

Total 200 100.0

Table 6: Expected Salary by Graduates

Figure 6 shows that 48% of graduates expected high salary between range RM3000-RM3999

which are 48% , salary range RM2000-2999 is expected by 25% of graduates and graduates with

no any expectation in term of salary are about 24%. The minority graduates expected salary range

fall under RM4000- RM4999.

4.2 Reliability Test, ANOVA T-test, F-Test and R Square

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 This section presented the summary of 200 respondents feedback on the 7 variables.

Reliability test and Inferential Statistic was conducted for 7 variables. Below are the details for the

entire following hypothesis

a) Reliability Test

Variables Cronbach Alpha Indication

Graduates Competency 0.981 Good

Quality of education 0.911 Good

Communication skills 0.890 Good

Choosing work attitude 0.960 Good

Lack of industrial training 0.992 Good

English proficiency 0.849 Good

Job Mismatch 0.540 Unacceptable

Cronbach Consistency Reliability for 6 variables out of 7 are acceptable with high

reliability or >0.7. Scores that are highly reliable are accurate, reproducible, and consistent

from one testing occasion to another. That is, if the testing process were repeated with a group

of test takers, essentially the same results would be obtained. Based on the below table, able to

identity that factor affecting unemployment rate among graduates is highly due to lack of

industry training, followed by graduates competency, choosing work attitude, quality if

education , communication skills and English proficiency. The variable job mismatch shows

lowest reliability in this test, thus this variable shall be rejected.

b) ANOVA T-test and F-Test

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 Variables Mean F-Test Significant

Graduates Competency 3.64 18.727 0.00

Quality of education 3.16 2.422 0.09

Communication skills 3.30 13.839 0.00

Choosing work attitude 3.28 19.768 0.00

Lack of industrial training 3.44 8.987 0.00

English proficiency 3.28 3.714 0.00

Job Mismatch 3.26 36.676 0.00

ANOVA table indicates that in overall are statically significant as the significant value is 0.00

with F-test value more than 0 (null). Thus this indicates that all 7 variables have significant

relationship with unemployment rate. The null hypothesis (H0) is rejected.

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