Unemployment Rate - Article Review

NEWS STRAITS TIMES
Unemployment rate drops

2011/07/06

THE country's unemployment rate currently stands at 3.1 per cent compared with the 3.4 per cent last year, the Dewan Negara heard yesterday.
Deputy Human Resources Minister Datuk Maznah Mazlan said the government was fully harnessing its workforce to keep the unemployment rate at four per cent and below.

This was because according to international standards, this was considered full employment.

"According to the Statistics Department, the percentage of unemployment last year was 3.4 per cent or 387,9000 people. Of the total, 65,500 were graduates.

"In the first quarter of this year, the unemployment percentage dropped to 3.1 per cent or 381,300. Of the number 71,600 were graduates," she said responding to Senator Khoo Soo Seang.

Maznah said the government had implemented measures to assist unemployed graduates.

These included offering a short service scheme with government departments, opportunities for apprenticeship and internship, and the 1Malaysia Training Scheme.

Under the short service scheme, graduates who have not secured jobs in six months after completing their studies have the opportunity to intern at participating government linked companies for a year and receive an allowance of RM1,000 a month.

Upon completion, the GLCs will assist in finding permanent positions for them.

"The programmes are to enhance the graduates' marketability and provide exposure so that they do not have to rely on the government for employment but can start their own businesses," she said.
Article about
During 2011 the employment rate decreases from 3.4% to 3.1% due to the government effort to control all the recourse and to maintain the unemployment rate under 4%. Based on the international standard the unemployment rate of 4% and below considered as full employment. Although the number of people that unemployed are decreasing but the number of unemployed graduates are increasing. Due to this situation, the government had executed measures to help graduates to get a job. The government offer a short service scheme which give a job opportunity to them besides giving them skills and internship. The allowance are also provided under the short service scheme. This will help to give the graduates exposure and encourage them to do their own business instead of relying on the government for the job.
Analysis
Based on the article, we can conclude that the type of unemployment that we can see is frictional unemployment. This type of the unemployment occurs when people are in between jobs, entering and reentering the labor force. This may happen when fresh graduates are actively seeking for a job. The numbers of unemployed graduates increase by 9.3% maybe due to the lack of soft skills and experience that most employers seek. The measure that the government took to control the unemployment is direct control measure, which is providing training and technical education and job creation in various sectors in an economy. The governments want to encourage the graduates to own a business because when there are more trade and transaction, the government revenue will increase. This will lead to economic growth and therefore can increase in GDP.

The effects of decreasing the unemployment rate
The first effect of decreasing unemployment rate is the incomes will increases. This will lead towards to more buying power and accelerating the inflation rate. Thus, this will effect to the distribution of income, the savings, production cost and balance of trade. The second effect of unemployment is new businesses will have a hard time succeeding, because everyone is already employed, who is going to work for them? New businesses will have to raise wages to entice people to work there which again raises wages and lowers profits to a point where it makes no sense to even start the business. Great levels of unemployment are around 3-5%.

The pros and cons of decreasing unemployment rate
The pro of decreasing unemployment rate is increase of income and self-respect. Secondly, increase the job skills. Thirdly, decrease social and political problems. Fourthly, the GNP gap becomes narrower because the GNP gap will almost towards to potential GNP. The contras of decreasing unemployment rate are inflation will occur and the new business will have hard time to survive.

The effect of decreasing rate of unemployment towards society
The first effect is employment may bring a increase in social outings and interactions with other people, including friends. Secondly, employment the competition for jobs and the negotiation power of the individual increases and thus also the living standard of people with the salaries packages and income higher. Thirdly, employment also brings up calm and steadiness amongst the tax paying citizens. For the fresh graduate employees, they will not face burden to settle their loans.

Recommendation or solution The first solution is, government can use progressive tax rate depends on the number of employees and use the current Malaysia Corporate Tax. If we use this method, the company in Malaysia will hire more employees in order to decrease the corporate tax and lead to the zero unemployment rates. The second solution is government can open up Malaysian mind to new kind of industry that can make the Earth as better place in the future. For example, this legislation would create an estimated 3 million new jobs by opening closed areas of the Outer Continental Shelf which is between Malaysia and Brunei for oil and gas exploration, and streamlining the licensing of nuclear power plants. This also would create royalty revenues for the government that the bill directs to a new trust fund that can promote renewable energy.